University of Missouri System, Columbia, made four new commitments totaling $96 million for its $3.3 billion defined benefit plan and $1.3 billion endowment pool, said Thomas Richards, treasurer and chief investment officer, in an e-mail.
The university system committed $46 million to buyout fund JLL Partners Fund VII, $20 million each to EverStream Solar Infrastructure Fund, an infrastructure fund managed by EverStream Energy Capital Management, and Taurus Mining Finance Fund, a natural resources fund managed by Taurus Funds Management, and $10 million to venture capital fund Khosla Ventures Seed C.
Separately, the system’s finance committee will recommend changes to the endowment pool’s and defined benefit plan’s target asset allocations at the board of curators’ meeting Thursday and Friday as a result of an asset-liability study conducted by staff and investment consultant Strategic Investment Solutions.
The recommendations include creating new targets of 10% each to portable alpha and risk parity in both the defined benefit plan and endowment pool, and a new commodities target of 3% target in the defined benefit plan and 2% in the endowment pool.
Other recommended changes are:
- reducing global equity in the DB plan to 37% from 45% and in the endowment pool to 43% from 49%;
- reducing global fixed income in the DB plan to 4% from 7% and in the endowment pool to 4% from 5%;
- reducing hedge funds in the DB plan to 6% from 8% and in the endowment pool to 6% from 12%;
- increasing real estate/infrastructure in the DB plan to 8% from 6% and in the endowment pool to 10% from 8%;
- reducing emerging markets debt to 5% from 7% in the endowment pool (and remaining at 6% in the DB plan);
- reducing opportunistic fixed income to 12% from 14% in the DB plan (and remaining at 7% in the endowment pool); and
- increasing inflation-linked bonds to 3% from 2% in the endowment pool (and remaining at 4% in the DB plan).
Private equity’s 10% targets in the DB plan and endowment pool would remain unchanged.
Mr. Richards said the board of curators will vote on the proposed changes at a later meeting, either at its June 25-26 meeting or a telephonic meeting beforehand.
Regarding new potential commitments as a result of new allocations, Mr. Richards said if the 10% risk-parity target is approved, most of that will go to existing managers AQR Capital Management and Bridgewater Associates, and the system might do a “limited search” for a third manager. The system hired both managers in October 2012 to run $250 million each in risk parity within the system’s general pool.
“If portable alpha program is approved, NISA (Investment Advisors) has already been identified as the provider for the synthetic equity exposure. Existing hedge fund managers will make up a large part of the associated alpha program. If commodities are approved, at least initially, we will likely implement that exposure synthetically through NISA,” he added.
Mr. Richards did not say what hires or terminations could result from other asset class target changes.
