University of Houston System committed $15 million total to two private equity funds on behalf of its roughly $610 million endowment.
The system committed $7.5 million each to Advent Global Private Equity VIII, managed by Advent International and HarbourVest Partners’ Dover Street IX, according to a webcast of Thursday’s endowment management committee meeting.
The system previously committed $5 million and $4 million, respectively, to predecessor funds Advent Global Private Equity VII and Dover Street VIII.
Separately, the endowment terminated three hedge fund managers: Proxima Capital Management, Covalent Partners and Senator Investment Group.
The system will redeem $9.4 million, $9.2 million and $11.2 million, respectively from Proxima Capital Offshore, Covalent Capital Partners Offshore and Senator Global Opportunity Offshore Fund.
An official working with the endowment cited two reasons for Senator’s termination — an ongoing strategy shift for the hedge fund portfolio and a concern that the absolute-return manager’s significant asset growth could be “detrimental to future returns.” Further information could not immediately be learned.
“Senator remains a very solid organization,” the official said during the webcast.
A desire to reduce the hedge fund portfolio’s credit exposure was provided as the reason for Covalent’s termination. Performance has been “solid,” the official noted.
With Proxima, the official said he was concerned an overweight to cyclicals, mainly industrials and energy stocks, was “overwhelming the stock picking.” He added that the long/short equity’s fund performance has been “disappointing” since its inception in the portfolio less than a year ago. That being said, Cambridge Associates, the endowment’s investment consultant, continues to “follow and like” the manager, the official said.
A Proxima portfolio manager declined to comment about the termination.
The endowment’s hedge fund target is roughly 30%. To maintain that target, potential new managers will be reviewed in the first half of 2016.
