University of Texas Enjoys Robust Returns

(July 17, 2011) — The University of Texas’ five endowment funds are up 20% in the year ended June 30, and up approximately 17% for the fiscal year to date.

The Austin-based university’s endowments totaled $20.3 billion as of May 31, Bruce Zimmerman, CEO of the University of Texas Investment Management Co. (UTIMCO) told Pensions & Investments. According to Zimmerman, returns for both time periods outpaced the pools’ customized internal benchmark return by roughly 100 basis points.

Meanwhile, the board of UTIMCO recently approved salary increases for the company’s staff. While staff base salaries were raised approximately 4%, Zimmerman’s base salary was increased approximately 4.3%, from $575,000 to $600,000.

Last year, the University of Texas made headlines when — amid fears and expectations of turbulent international financial markets and high inflation — it invested $500 million in gold, a commodity whose value usually only grows due to fears of inflation.

“The $500 million commitment in gold by UTIMCO was a tactical allocation decision made by management,” Zimmerman told aiCIO in July 2010. “UTIMCO has been laddering in this exposure over a number of months. The investment in gold was a hedge against lack of confidence in financial assets due to lack of government fiscal and monetary discipline.”

Still, the fund’s gold purchase equated to a small fraction of its overall value.