Houston Chronicle
by R.G. Ratcliffe and Jeannie Kever
Web Posted on www.MySanAntonio.com/Education: 07/15/2010 12:18 CDT
AUSTIN — Fearing unstable international financial markets and the possibility of high inflation, Texas’ higher education investment managers have bought more than $500 million in gold.
The purchases represent only 3 percent of the University of Texas Investment Management Co.’s $22.3 billion in investment funds, but it indicates how deeply the fund managers are concerned about the global financial future.
With the state’s endowment funds designed to generate a 5.1 percent distribution each year to the University of Texas and Texas A&M University, it’s rare for the investment managers to put large sums of money into a commodity whose value usually grows only through inflation.
“If there’s no inflation, that dollar today in gold a year from now should be worth a dollar, UTIMCO CEO Bruce Zimmerman told the University of Texas board of regents Wednesday. “If there is inflation, then a dollar of gold should be worth a dollar plus inflation,” he said.
“Recently we’ve added 3 percent … of our portfolio, into gold as a protection against inflation, but even more as a lack of confidence in financial markets due to extraordinary government fiscal and monetary stimulus,” Zimmerman said.
“I wish I could tell you the future looked rosy. Unfortunately, that’s not our view. At best, we believe the future is uncertain.”
Two of Texas’ other large state investment funds, the Teacher Retirement System of Texas and the Permanent School Fund for the public schools, haven’t bought gold recently, according to spokesmen.
Other UTIMCO executives suggested the endowments have begun to recover from the staggering losses of 2008 and early 2009.
UTIMCO manages investments for all UT system schools and for the Permanent University Fund, which provides money to both UT and A&M. Its assets dropped by almost $3 billion, to $20.5 billion, in 2009.
It’s now back up to $22.3 billion.
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