Texas Permanent School Fund, Austin, terminated BlackRock from approximately $8.5 billion in assets, said Aaron Kinsey, chairman of the state’s board of education, in a posting on X (formerly Twitter).
The $52.3 billion endowment informed BlackRock of the terminations in two March 19 letters from CEO/CIO Robert Borden, emailed by a spokeswoman.
The terminations affect a BlackRock international equity portfolio that had $4.1 billion in assets and an emerging markets equity separate account called the Navarro 1 fund that had $820 million in assets, both as of June 30, 2022, according to a September 2022 board meeting packet. BlackRock was the only listed non-U.S. equity manager. More recent data was not available.
In his X post, Kinsey, who is also a member of the Permanent School Fund board of directors, said the relationship was terminated in order to comply with the Texas Government Code Section 809, known popularly as the anti-ESG law.
Texas Comptroller Glenn Hegar in August 2022 included BlackRock on a list of 10 financial companies he determined “boycott energy companies” as a result of that law.
In a statement from a spokesman, BlackRock said, "Today’s unilateral and arbitrary decision by Board of Education Chair Aaron Kinsey jeopardizes Texas schools and the families who have benefited from BlackRock’s consistent long-term outperformance for the Texas Permanent School Fund. The decision ignores our $120 billion investment in Texas public energy companies and defies expert advice. As a fiduciary, politics should never outweigh performance, especially for taxpayers.”
According to TPSF's most recent comprehensive financial annual report, for the one, three, five and 10 years ended Aug. 31, the endowment's international equities portfolio returned an annualized net 12.4%, 4.1%, 3.6% and 4.7%, above the respective benchmarks of 11.9%, 4%, 3.3% and 4.4%, while for the one, three and five years ended Aug. 31, the emerging markets equity portfolio returned an annualized net 2.5%, -1.9% and 0.9%, respectively, compared with the respective benchmarks of 1.3%, -1.4% and 1%.
The Permanent School Fund spokeswoman would not provide further comment.