Texas Permanent School Fund, Austin, awarded $350 million each to Pacific Investment Management Co. and Credit Suisse to invest in long-only commodities.
Commissioners of the Texas State Board of Education, which oversees management of the $24.4 billion educational endowment, approved the investment in PIMCO's Commodity Real Return and Credit Suisse's Enhanced Total Commodities strategies, according to a webcast of the board's July 20 meeting.
Permanent School Fund investment staff and NEPC, the fund's consultant, were also directed to select an appropriate benchmark for the commodities portfolio, including possibly creating a proprietary index, and to present it to the board at its Nov. 16 meeting.
Goldman Sachs Asset Management and Vermillion Asset Management were the other finalists. Both managers offered long/short commodity hedge fund strategies; Vermillion also recommended splitting the mandate between its long/short and long-only funds.
The combined $700 million investment completes the Permanent School Fund's 6% allocation to real return, a new portfolio segment that was established last year. The other 3% of the real-return asset class is managed internally in U.S. Treasury inflation-protected securities.