University of Alabama System's investment committee approved manager hires, investments and commitments totaling $167 million for its $1.9 billion pooled endowment fund.
The Tuscaloosa-based university's investment committee approved the actions at its remote March 28 meeting, a video of the meeting shows.
Within the endowment fund's public equities asset class, the investment committee approved a direct hedge fund investment of $48 million in The Children's Investment Fund, managed by London-based activist investing firm TCI Fund Management, and hired Polen Capital Management to run $38 million in active domestic large-cap growth equities, Pacific Investment Management to run $38 million in enhanced domestic large-cap value equities and RWC Partners to run $28 million in active emerging markets growth equities.
Funding comes from the terminations of Dimensional Fund Advisors from an active emerging markets small-cap equity portfolio, PIMCO from an enhanced global value equity portfolio and a full redemption from Yost Focused Long Offshore Fund, a hedge fund managed by Yost Capital Management. Individual portfolio sizes of terminated managers were not provided.
Investment consultant Fund Evaluation Group recommended the changes to the public equity portfolio to improve risk-adjusted returns, according to a presentation shown during the meeting.
Specifically, FEG recommended the termination of the DFA portfolio because it had the smallest position in the public equity portfolio and RWC Partners' Redwheel Emerging Markets Strategy selected by the endowment "provides a more robust form of exposure to emerging market equities," the presentation said. The consultant also recommended switching PIMCO's enhanced index strategy to a solely domestic portfolio because the opportunity set for global equities is stronger for purely active strategies, and recommended the redemption from the Yost Capital strategy due to "overlap and redundancies" with other global equity managers in the endowment's portfolio.
The pooled endowment fund's target allocations to public equities is 33%. Within the public equity portfolio, the targets are 58% domestic, 28% international developed and 14% emerging markets.
Also at the March 28 meeting, the investment committee approved a commitment of up to $15 million to Sterling Group Partners Foundation Fund, a middle-market buyout fund that focuses on the acquisition of underperforming businesses in the industrial, manufacturing and distribution sectors.
The pooled endowment fund's target allocation to private equity is 28%.
Nolan Bean, head of institutional investments at Fund Evaluation Group, could not be immediately reached for further information.