University of Texas Investment Management Co. will start doling out nearly $4 billion to new external money managers next year.
The board of regents of the University of Texas System gave UTIMCO investment control of $3.8 billion in operating funds in August to help centralize the cash management functions of the nine universities and six health-care institutions in the system. The regents oversee Austin-based UTIMCO, which is also responsible for the investment of four endowment funds that totaled $14.5 billion on Aug. 31.
Scott Kelley, executive vice chancellor for business affairs for the University of Texas system and the architect of the cash centralization plan, said the UTIMCO board will review an asset allocation proposal in a few weeks and the regents will consider the proposal at their November meeting. The changes will begin Feb. 1, and external managers will be selected around that time, he said.
Woody L. Hunt, vice chancellor of the board and a member of its finance and planning committee, said the board's aim is to have the operating funds invested according to a longer time horizon with an asset allocation more like that of the endowment funds. UTIMCO will not invest in private equity, however, because of liquidity concerns.
Previously, UT member institutions could choose among four investment options offered by UTIMCO: a short-intermediate fund managed by UTIMCO staff, which had $1.2 billion as of Aug. 31; a short-term securities fund managed by external managers, $2.4 billion; an institutional equity index fund managed by Barclays Global Investors, with $174 million; and a BGI institutional bond index fund. There were no assets in the last option as of Aug. 31, according to board documents.
UTIMCO's consultant is Ennis Knupp.