T. Britton Harris IV is relying on many of the tenets he honed as chief investment officer of the $151.4 billion Teacher Retirement System of Texas in overhauling the investment management of $43 billion of endowment and operating funds of The University of Texas/Texas A&M Investment Management Co.
In the nine months since he made the crosstown move in Austin to serve as UTIMCO's president, CEO and CIO, Mr. Harris conducted a comprehensive review of the operations of UTIMCO.
"We went through a very significant action plan process across the whole organization to lay a foundation that can last for years," Mr. Harris told UTIMCO's board of directors during a Feb. 28 meeting, according to an audio recording.
"The two most important words for (2018) are total alignment," Mr. Harris said, stressing the goal of the changes he is making is to align UTIMCO internally, with its board of directors, with external partners including money managers, and with its investment clients — the University of Texas and Texas A&M University.
The new investment priorities, detailed in UTIMCO's Feb. 28 board book, closely echo those of Austin-based Texas Teachers, including:
- Focus on private investments, particularly to increase co-investments.
- Create large, multiasset strategic investment partnerships with money managers in public and private market strategies, particularly private equity, real estate and natural resources, with a significant co-investment component.
- Add a stable value hedge fund component to the existing portfolio of directional hedge funds.
- Lower and better-align money manager fees.
Mr. Harris' choice of two former Texas Teachers' officials as his chief lieutenants in rebuilding UTIMCO reinforces the links to the TRS way of investment.
Richard Hall, UTIMCO's deputy CIO, was managing director and head of private equity and principal investments at the teachers' system. Ken Standley, UTIMCO's chief of staff, was deputy chief of staff at the teachers' fund.
Specifics about UTIMCO's restructuring plans were not available, said Karen Adler, a University of Texas spokeswoman. Mr. Harris wasn't available for an interview and the company's investment department could not respond to questions from Pensions & Investments by press time.
However, perusal of meeting reports and audio from UTIMCO board meetings provide a detailed look at the plans of UTIMCO's senior management team.
During the February board meeting, for example, Mr. Harris said a top goal of the investment staff was to transform UTIMCO into "the preferred destination for attractive large investments. ... We want to be a preferred client, the client the manager brings the best deals to," according to the audio recording.
He made a very similar pitch to Texas Teachers' trustees three years earlier.