University of Michigan, Ann Arbor, disclosed $226.3 million in alternative and absolute-return commitments, as well as a direct investment, from its $12.4 billion long-term endowment pool ahead of its board of regents meeting on Thursday.
The commitments and investment were made from February through April. UM's investment office has authority to invest in new funds and strategies offered by existing managers without approval by the board, board documents show.
In alternatives, the university made three $50 million commitments. Two were in February — one to Phoenix Asia Real Estate Investments VI(A), a Hong Kong, China-based real estate fund managed by Phoenix Property Investors, and another to Turner Multifamily Impact Fund II, a real estate fund that will invest in workforce rental housing in underserved urban communities in the U.S. managed by Turner Impact Capital. The last $50 million alternative commitment was in March to SSC VI, a real estate fund managed by Spear Street Capital that will target office investment opportunities in areas with significant technology and media tenants like San Francisco and Seattle.
Rounding out alternatives, the university committed $15 million to various Eclipse Ventures funds, which make growth equity investments in early stage U.S.-based technology startups. The university did not note the specific Eclipse Ventures funds or amounts. It also increased its commitment by $1.3 million to Kawadacho, a co-investment in an 816-unit residential complex in Tokyo managed by Westbrook Partners. The university originally committed $10 million to the co-investment in November 2017.
In absolute return, regents committed $50 million in March in the Kaleidoscope Fractal Fund managed by Kaleidoscope Capital, an investment firm that specializes in trading a broad spectrum of financial instruments. The firm develops strategies that efficiently take advantage of structural mispricings within the global capital markets. The purpose of this new fund is to exploit situations where the market is not correctly discounting the probability of a discrete economic outcome, board documents show.
In March, the university invested $10 million in Project Overnight, a direct investment in a Madison, Ill.-based company that provides overnight delivery from original equipment parts manufacturers to the fragmented original equipment manufacturer dealer networks that need parts daily to perform repairs.
Under a limited delegation granted in July 2015, the executive vice president and chief financial officer may approve new investments representing less than 1% of the long-term portfolio's assets that advance the portfolio's objectives and meet its risk and return targets, according to board documents. The Project Overnight investment is in that category.