Texas Permanent School Fund, Austin, is adding Dimensional Fund Advisors and Intech to its manager roster, a spokeswoman said.
The $52.3 billion endowment is not disclosing the strategies in which it is investing, nor the sizes of the portfolios, the spokeswoman said.
The new manager announcements come on the heels of the termination of BlackRock from a total of $8.5 billion, or just over 16% of the endowment’s total assets. The spokeswoman did not specifically say whether the new managers are direct replacements for BlackRock.
In a March 19 news release from the endowment announcing the termination of BlackRock, Tom Maynard, chairman of the Texas Permanent School Fund, said, “Companies pushing anti-Texas policies and woke indoctrination have no place in Texas public education, whether in the classroom or as investments in Texas Permanent School Fund. We will continue to defend our Texas values while generating more resources to support the school children of Texas.”
In 2022, Texas Comptroller Glenn Hegar added BlackRock to a list of 10 financial companies he has determined “boycott energy companies.” Hegar’s action was the result of a 2021 state law that restricts the state’s pension funds and other state entities from investing in companies that divest from fossil fuels.
The terminations affect two portfolios: 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 the most recent data available in a September 2022 board meeting packet. According to the March 19 TPSF news release, the current assets in the portfolios totaled $8.5 billion.
A replacement for the BlackRock emerging markets equity portfolio is highly unlikely following the TPFS board of directors voting to eliminate the asset class entirely at its Feb. 1 meeting. The board voted to eliminate the 2% target allocation to emerging markets equities, as well as lower the target to international equities to 7% from 14% based on the recommendation of Robert Borden, CEO/CIO of the school fund.
If DFA and Intech are replacements for BlackRock as international equities, it is likely their allocations will be markedly less than the BlackRock portfolio. In a March 20 email, Borden said the BlackRock portfolios were terminated as a direct result of the allocation changes.
"The main implication of Texas Government Code Section 809 was the fact that we chose not to engage BlackRock in a new revised international equity strategy at this time, and therefore are closing the existing strategy altogether," said Borden. "This certainly brings the PSF into closer alignment with the spirit and intent of Section 809."
Borden could not be immediately reached for further information on the new managers.
