Texas School Fund Mulls Fee-Saving Overhaul Of Hedge Portfolio

Jan 27 2012 | 11:19am ET

The Texas Permanent School Fund is fed up with fund of hedge funds fees.

The $25 billion endowment's already modest return from its $2.42 billion in hedge fund investments were eliminated by fees—leaving the fund with a loss. While the Texas Permanent fund invests just 16% of its assets in absolute-return and private equity funds, those funds account for a whopping 68% of its costs.

"The sector that should have enhanced our funding for schools actually detracted from it," Holland Timmins, chief investment officer, said. "We had a positive return in the asset class, modestly, but it got eaten alive by the fees."

Holland proposed at a State Education Board meeting on Wednesday hiring more in-house managers—possibly as many as 30 new employees—and getting rid of at least one of the five funds of funds to which it currently allocates.

One of the other five—Blackstone Alternative Asset Management, GAM Holding, Grosvenor Capital Management, K2 Adivsors and Mesirow Advanced Strategies—would be chosen to advise the Texas fund on allocating to hedge funds, Timmins said.

While the proposals are designed exclusively to save the fund money, a member of the its investment committee said of the funds of funds, "They will still be making plenty of money."


In Depth

Q&A: Pantheon’s McCrary Says Private Equity Market ‘Robust’

Dec 17 2014 | 8:32am ET

Dennis McCrary is a partner at Pantheon, a private equity firm with $32.2 billion...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.