Consideration of the Development of Strategic Relationships Within the
Absolute Return Asset Class
November 18, 2011
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: ACTION
STATE BOARD OF EDUCATION: ACTION
SUMMARY: This item provides an opportunity for the committee and board to review the development of strategic relationships within the absolute return asset class in order to reduce management fees.
STATUTORY AUTHORITY: Texas Constitution, Article VII, §5(f).
PREVIOUS BOARD ACTION: None.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: At the July 2006 meeting, the board approved a long-term strategic asset allocation which included a 10% allocation to the absolute return asset class. K2 was placed on the Permanent School Fund watch list at the November 2010 meeting. GAM USA, Inc. was also placed on the watch list at the September 2011 meeting.
FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $1.9 billion during the 2012-2013 biennium.
PUBLIC AND STUDENT BENEFIT: The distribution of the Permanent School Fund will flow to the school districts and reduce the tax burden to the public and the state of Texas.
PROCEDURAL AND REPORTING IMPLICATIONS: Not applicable.
PUBLIC COMMENTS: None.
ALTERNATIVES: No alternative actions are proposed regarding this item.
OTHER COMMENTS AND RELATED ISSUES: None.
Commissioner of Education
Staff Member Responsible:
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund