University of Houston System revised its near- and long-term targets for its $563 million endowment, according to a webcast of Thursday's endowment management committee meeting.
The new near-term targets are:
- 42% global public equities, composed of U.S. equities, developed markets international equities and developing markets equities;
- 30% hedge funds, made up of hedged equity and absolute return;
- 10% private equity/venture capital (formerly private investments);
- 10% private and public real assets (formerly marketable-inflation hedge);
- 7% bonds; and
- 1% cash.
The new long-term targets are:
- 40% global public equities;
- 20% hedge funds;
- 20% private equity/venture capital;
- 10% real assets; and
- 10% bonds.
The endowment's previous near- and long-term public equity targets were 45% and 42%, respectively. U.S. equity, developed markets international equity and developing markets equity had dedicated subasset class targets, which have been removed under the new structure, giving the committee more flexibility to establish opportunistic exposures, according to materials prepared for Thursday's meeting.
Hedged equity and absolute return's dedicated targets (15% each near-term and 10% each long-term) have also been removed under the new structure, with the overall hedge fund target remaining the same.
Also under the changes, private investments was renamed private equity/venture capital and marketable-inflation hedge was renamed real assets. Some real assets, previously included under private investments, will move to the new real assets category.
Under the old structure, the near- and long-term private investments targets were 10% and 25%, respectively. Marketable-inflation hedge had a 5% near- and long-term target.
Bonds and cash remain mostly the same under the new structure, although the near-term bond and cash targets were reduced 50 basis points and 150 basis points, respectively, to 7% and 1%.
“No managers have been identified for termination directly related to (the) target asset allocation changes,” said Raymond Bartlett, associate vice chancellor for finance for the system, in an e-mail. ”New managers will continue to be recommended by (investment consultant) Cambridge over time in order to reach the long term target allocation especially to private equity/venture capital.”
Mr. Bartlett added that he anticipates the endowment will invest in both global equity and dedicated U.S. equity, developed markets international equity and developing markets equity strategies.