UTIMCO adopts new strategic asset allocations for endowment funds

The Board of Directors of the University of Texas / Texas A&M Investment Management Co., Austin, has approved a strategic asset allocation for the two endowment funds managed by UTIMCO.

The new asset allocation of the Permanent University Fund of $ 30.5 billion and the Long-Term Fund of $ 18.6 billion for the fiscal year ended August 31, 2022 will come into effect on September 1, 2021..

The directors approved the change at a meeting on June 29, University of Texas System spokesperson Cathy Biow confirmed in an email.

In FY2022, the total target allocation to the endowment’s broad global equity class increased to 65.7% of the fund’s assets, from 63.1% in FY2021. while the new long-term goal will bring the total target allocation to global equities to 65%. 63% endowment assets, according to a report presented to UTIMCO’s board at the meeting.

UTIMCO has made the following changes to the asset subclasses within the global endowment equity portfolios.

The FY2022 target allocation to developed market public equities will increase from 23% to 27% and the long-term allocation will increase from 25% to 27%.

The target private equity allocation for the year ended August 31, 2022 will increase from 22.8% to 24.2% and the long-term allocation will remain at 25%.

The FY2022 target allocation to emerging market public equities will decrease slightly to 8% from 8.1% in FY2022 and remain at 8% over the long term.

The target allocation to directional hedge funds will be significantly reduced to a target of 6.5% for fiscal 2022 from 9.2% for fiscal 2021, while the long-term target allocation will remain at 5%.

The target allocation of endowments to large, stable-value portfolios will be reduced slightly in FY2022 to 17.5% of assets from 17.9%, while the long-term objective will drop to 16% from 18 % currently.

In fiscal 2022, the target allocation to stable value hedge funds will increase from 9.5% to 9.2%, while the long-term objective will remain at 10%.

The current 7.4% allocation to global global bonds will increase to 4.5% in fiscal 2022 and will be eliminated in the long-term target allocation. Currently, the long-term target allocation to the asset subclass is 7%.

A new target allocation of 2.8% to US Treasury long bonds is planned for fiscal 2022. The long-term allocation is 5%.

The target cash allocation in stable value portfolios will remain at 1% for both short and long term allocations.

UTIMCO’s overall target allocation to endowment real return portfolios will increase to 16.8%, from 19% in FY2022, while the long-term target remains at 19%.

The target allocation of the real estate portfolio for fiscal year 2022 is less than 7.3% compared to 7.9%. The long-term target allocation will be less than 9% instead of 10%.

The short-term target allocation to natural resources for fiscal 2022 will increase from 6.1% to 4.5% and the long-term target will remain at 3% of total fund assets.

In FY2022, the target endowment fund infrastructure allocation will increase to 3% from 3.3% for the current fiscal year. The long-term target allocation to the asset sub-class will be lowered to 5% instead of 6%.

UTIMCO has adopted an allocation target of 1.7% for Treasury Inflation Protection Securities in FY2021, which will increase to a target of 2% for FY2022 and over the long term. Prior to fiscal 2022, no long-term objective had been set for the asset class.

As of May 31, UTIMCO managed a total of $ 64 billion, including $ 49.1 billion from the two endowments and the remaining operating funds for the University of Texas and Texas A&M Systems.

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