University of Michigan, Ann Arbor, invested or committed a total of $533 million in 10 investment strategies from its $10.2 billion long-term endowment pool.
University regents approved investments totaling $280 million with four new money managers, according to materials from a board meeting Thursday.
In hedge funds, $100 million each was allocated to Risk Premium Investment Management Co. to invest in a portfolio of systematically managed risk-premium strategies managed by investment banks, and to Farringdon Capital Management for investment in a long/short equity strategy with a geographic focus on the U.S. and Europe, said Kevin P. Hegarty, executive vice president and chief financial officer, in a meeting report.
Regents also approved commitments to two specialist natural resources private equity managers. BCP Energy Services Fund, managed by Bernhard Capital Partners, received a $50 million commitment, and Carnelian Energy Capital, a $30 commitment. Both funds will make investments in North American energy-focused companies, according to Mr. Hegarty’s report.
Mr. Hegarty also reported to regents about five commitments and one investment totaling $253 million made by the investment division to new funds offered by existing alternative investment managers.
Staff committed $14 million to HealthCap VII, managed by HealthCap Venture Capital, which will invest in life science and health-care companies, primarily in Western Europe.
A $74 million direct private equity investment was made in Ardent Health Services, a hospital operating company. UM participated in a consortium of investors to buy the firm from a private equity manager, Mr. Hegarty’s report showed.
Commitments were made to two credit funds: $30 million to Shoreline III Co-Investment, managed by Shoreline Capital and focused on distressed and special situations investments in mainland China; and $50 million to Catalyst Fund I, managed by Catalyst Capital Group, which will invest in distressed Canadian companies.
From the real estate portfolio, $35 million was committed to Turner-Agassi Charter School Facilities Fund II, managed by Turner Impact Capital. The fund will provide facilities financing for public charter schools in urban markets across the U.S.
A $50 million commitment also was made to Westbrook Real Estate Fund X, managed by Westbrook Partners, for investment in gateway markets in the U.S., Japan, U.K., Germany and France.
The university also reported at the meeting that the long-term portfolio increased 5.2% to $10.2 billion in the fiscal year ended June 30.
Returns of the portfolio for periods ended June 30 were for one year, 3.5% (benchmark, 3.9%); three years, 10.8% (10.8%); five years, 11% (10.8%); 10 years, 8.4% (7.5%); and 15 years, 7.8% (6%). Multiyear returns are annualized.
L. Erik Lundberg, the endowment’s CIO, said the endowment’s returns were “tempered by sharply lower energy prices, which impacted the performance from the university’s relatively large allocation to natural resources; an appreciating U.S dollar that eroded the returns of the often well-performing non-U.S-based investments; and high starting valuations, which dampened returns from equity and fixed-income investments.”
The pool’s asset allocation as of June 30 was 28.3% public equities, 16.8% hedge funds, 13.4% venture capital, 12.2% private equity, 9.9% fixed income, 9% real estate, 6% natural resources and 4.4% cash.
