Texas State Board of Education, Austin, approved a search Friday for a passive international equity manager to run $4.7 billion for the $30 billion Texas Permanent School Fund, which it oversees.
The contract of current manager, BlackRock, expires Aug. 31, 2017, and after several contract extensions, the school fund must put the contract out to bid, Holland Timmins, the endowment's executive administrator and chief investment officer, told commissioners during a meeting of the SBOE's finance committee Thursday. BlackRock is invited to rebid.
One manager is sought to run the indexed allocation, which will track non-U.S. developed country markets and emerging markets indexes, Mr. Timmins said, according to a webcast of the committee meeting.
The RFP will be posted on the state comptroller's website within two to three weeks, said Debbie Ratcliffe, an SBOE spokeswoman. Responses will be due by Nov. 8. Finalists will be presented to the finance committee at its April 19, 2017, meeting, Mr. Timmins said.
The board also approved commitments to two managers from the PSF's $2.1 billion real estate portfolio.
It committed $100 million to Metropolitan Real Estate Equity Management for a separately managed account that will seek opportunities in the secondary real estate market. John Grubenman, PSF's director of private markets, stressed to finance committee members that investment staff will have full discretion on Metropolitan's investment recommendations.
The board of education also approved a commitment of $75 million to Longpoint Realty Fund I. LongPoint Realty Partners is a new real estate manager, and the education fund will be one of two large institutional anchor investors in the firm's first fund, said Mr. Grubenman.
Longpoint's strategy focuses on acquisitions in “last mile industrial” properties in the U.S., Steven C. Novick, chairman, principal and chief operating officer of PSF's real estate consultant, Courtland Partners, told finance committee members. The strategy is a “good niche” for the mature PSF real estate portfolio because it taps into the strong global growth of warehouse and storage properties strategically located to distribute goods to retail and wholesale customers within about one hour, Mr. Novick said.
Separately, the school fund's gross of fees returns as of June 30 were one year, 0.9% (benchmark, 0.5%); three years, 6% (5.8%); five years, 6.2% (5.8%); and 10 years, 5.7% (3.4%).
