Michigan Endowment Adds to Bets on Private Equity, Real Estate

  • School is down 2.7% in its marketable security portfolio
  • Michigan is third largest public school fund at $10 billion

The University of Michigan’s $10 billion endowment added to its investments in venture capital, private equity and real estate as it struggles to recover from losses.

Michigan invested $177 million in commitments mostly to the private funds, with $45 million going to two energy pools, according to the Board of Regents agenda for its meeting Thursday. The marketable securities portfolio, which makes up 58 percent of the endowment, lost 2.7 percent in the fiscal year through May 31.

Many schools say they are expecting negative returns in fiscal 2016 after the slowdown in China and the U.K.’s decision to leave the European Union stirred market turmoil. Michigan’s absolute return portfolio was down 4.1 percent through May 31, and equities, which comprise its largest allocation at 26 percent, fell 5.4 percent.

The largest commitment disclosed by Michigan, which had $10 billion in assets a year ago, was $50 million in April to Carmel Partners for a real estate fund for urban areas in the U.S. The school also added $7 million in November to AH Bio Fund I, sponsored by Andreessen Horowitz, to invest in early-stage health-care focused information technology companies.

The school added $15 million in March to Accel London V, a London-based venture capital fund that will invest in early- and growth-stage technology companies. The energy investments include $25 million in April to Yorktown Energy Partners XI, and $20 million in March to Terra Energy Partners, a co-investment offered by Kayne Private Energy Income Fund.

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