University of Houston System committed or invested $42.5 million total to six alternatives managers on behalf of its $572 million endowment, according to a webcast of Thursday’s endowment management committee meeting.
In private equity, the system committed $32.5 million total to four funds — $10 million to EnCap Energy Capital Fund XI, a private equity oil and gas fund managed by EnCap Investments, and $7.5 million each to buyout funds Great Hill Equity Partners VI, managed by Great Hill Partners; Silver Lake Partners V; and Trident Fund VII, managed by Stone Point Capital.
The system has previously invested with all four managers. The endowment has a private equity target of 25%.
In hedge funds, the system invested an additional $5 million each in HBK Multistrategy Offshore fund and David Kempner Institutional Partners to help bring the hedge fund portfolio closer to its near-term target of 30%. The system currently has $11.6 million invested in the HBK Capital Management fund and $12.6 million in the Davidson Kempner Capital Management fund.
In fixed income, the system terminated Franklin Templeton Investments from a roughly $18.7 million global bond strategy. Assets will be transferred to Smith Graham & Co. Investment Advisors for a new intermediate aggregate bond strategy. Smith Graham currently manages $23.6 million in a long-duration U.S. Treasury strategy, which is being removed. The final allocation size for the intermediate bond strategy could not immediately be learned.
A desire to reduce interest rate sensitivity in the fixed-income portfolio, remove currency risk and “provide additional sources of value-add” were cited as reasons for the changes, according to materials prepared for the board meeting. The changes are expected to save the system $100,000 in fees annually.
In global equities, the system approved a full redemption from a passive U.S. dollar-hedged international equity strategy managed by Deutsche Asset Management and partial redemptions from active Asia-Pacific-ex Japan equity manager J O Hambro Capital Management and active emerging markets equity manager Oldfield Partners. The redemptions, totaling $18 million, will help streamline the global equity portfolio and meet cash needs, an official at Cambridge Associates, the endowment’s consultant, said in the webcast. The size of the portfolios could not be learned by press time.
A university spokeswoman could not immediately be reached for additional information.