(updated with correction)
Texas Teacher Retirement System, Austin, retained three of its five existing consultants, extending their contracts for two years from Aug. 31, with two annual renewal options.
At a Thursday board meeting, trustees renewed Hewitt EnnisKnupp as the $109.1 billion system's general consultant, with fees increasing to $1.325 million per year from $950,000.
Specialist consultants renewed were Albourne America for hedge funds and Townsend Group for real assets. Annual fees were unchanged for Albourne at $400,000 and for Townsend Group at $600,000.
Staff was directed by trustees at the meeting to negotiate with and decide which of two existing private equity consultants — Hamilton Lane Advisors and Altius Associates — will become the fund’s sole private equity consultant, wrote Howard J. Goldman, a spokesman for the fund, in an e-mail. Hamilton Lane currently is the fund’s domestic private equity consultant, and Altius covers international private equity. The new contract will be for global private equity advisory services. Mr. Goldman said in his e-mail that a choice will be made before the end of July.
Under a new initiative to make direct investments in emerging private market managers, as part of their new contracts, Hewitt EnnisKnupp and Townsend Group will act as evaluators of small private equity and real asset managers, respectively. Duties will include manager due diligence and sourcing, investment staff told trustees during the Thursday meeting.
According to meeting support documents, Texas TRS intends to invest $350 million in both 2011 and 2012 in emerging managers. Credit Suisse will continue to manage an emerging manager fund of funds that had invested or committed $100 million to private equity and $200 million to real assets as of March 31.
In a presentation to the board, Steve LeBlanc, senior managing director, external private markets, said the goal for 2011 was to make commitments of $3.2 billion to external real assets managers and $1.5 billion to external private equity. The move was made “to support long-term diversification,” according to Mr. LeBlanc's presentation. As of March 31, Texas Teacher had $17.6 billion or 9.2% committed and invested in externally managed real assets and $16.9 billion or 9% in private equity. The target allocations to each asset class are 15% and 10%, respectively.
T. Britton Harris IV, chief investment officer, reported to trustees that the Texas fund returned 15.9% in the year ended March 31, which was 1.5 percentage points above the policy benchmark. The fund's assets increased $15 billion in the year.
Mr. Harris also told trustees that a bill raising the fund's hedge fund investment limit to 10% had been signed by the governor. The previous limit was 5%.
