University of Michigan, Ann Arbor, hired the Clifton Group to provide a derivatives overlay strategy on the university's $8.4 billion long-term endowment pool and committed $36 million in two alternative investment strategies.
Regents approved the Clifton Group hire for both the overlay strategy and transition management services during their meeting on Thursday.
UM's investment office will direct Clifton to “increase or decrease capital market exposure through the use of instruments such as futures, swaps, options or exchange-traded funds,” wrote Timothy P. Slottow, executive vice president and chief financial officer, in a report to the regents.
Mr. Slottow said management of market exposures will be used to eliminate “cash drag” in the portfolio from residual cash or during investment manager transitions. The overlay also will be used for rebalancing and to hedge market exposures.
Separately, Mr. Slottow reported that investment staff committed $12 million to Battery Ventures X (main fund) and $4 million to Battery Ventures X Side Fund. The venture capital funds are managed by Battery Ventures and will be invested in technology funds at all stages of growth. The side fund will co-invest in later-stage Battery X deals that are too big for the main fund to participate in, according to meeting materials.
Also, Blue Water Energy Fund I received a $20 million commitment from the UM long-term endowment fund. The private equity fund will invest globally in companies involved in energy supply, with a concentration in oil-field equipment and services, and to a lesser degree, existing oil and gas reserves.
The natural resources-oriented fund is managed by Blue Water Energy.