Texas Permanent School Fund, Austin, recommended Grosvenor Capital Management and Blackstone Alternative Asset Management for a strategic partnership to manage a combined $2.5 billion in direct investment in hedge funds, according to a webcast of the Texas State Board of Education's Wednesday finance committee meeting.
The strategic partnerships are part of a hedge fund portfolio restructuring move, which will see all $2.5 billion in fund of funds assets transitioned into the new partnerships. Grosvenor manages $770 million in fund of funds and Blackstone manages $637 million.
The $24 billion permanent fund's remaining hedge fund-of-funds managers — K2 Advisors, which managed $380 million; GAM USA, $328 million; and Mesirow Advanced Strategies, $317 million —would be terminated under the recommendation.
The recommendations must be approved by the full state board of education, which oversees the permanent fund on behalf of the Texas Education Agency. The board will consider the recommendation at a meeting Friday.
Holland Timmins, executive administrator and chief investment officer, said in the webcast the move to strategic partnerships will save the fund more than $6 million in fees in the first year and $35 million over five years.