Here in the United States, some states are known for their outsized presence in certain industries. For example, California is the center of tech, New York dominates finance… and Texas knows a thing or two about oil, gas and land.  

#-ad_banner-#That said, it may come as no surprise that natural resources and real estate are well represented in the portfolio of the University of Texas System, which possesses one of the largest university endowments in the United States.  

Headed by the University of Texas Investment Management Co. (UTIMCO, for short), the endowment is the largest public one of its kind in the nation, placing third when taking private colleges into consideration (the first and second spots belong to Harvard and Yale, respectively). With over $20 billion in assets under management, UTIMCO serves 15 schools in the University of Texas System, including UT-Austin and the UT Southwestern Medical Center.  

Now in its 19th year of operation, UTIMCO pools its assets into a number of funds and vehicles with varying investment horizons and risk objectives. Since the bulk of the endowment is meant to serve the underlying universities and its students for years and years to come, expect to see holding periods reaching into the decades — all while promoting income and principal growth.  

UTIMCO operates as a nonprofit, with an inherent responsibility to act as a good steward of the university system’s endowment funds. Thus, constant distributions are necessary to sustain operations, and the portfolio is built to accommodate that.

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	Flickr/jeffgunn
	UTIMCO serves 15 schools in the University of Texas System, including UT-Austin and the UT Southwestern Medical Center.

A quick glance at the fund’s investment portfolio shows that UTIMCO strives to have a presence in industries that have served the state well for years, such as energy and real estate — two industries that are known to pay high yields as well.

UTIMCO submitted a Form 13F to the SEC early this quarter, revealing some interesting equity holdings. Let’s take a closer look at some its notable picks.

Energy Transfer Partners (NYSE: ETP) maintains a portfolio of energy assets operating under the structure of a master limited partnership (MLP). As its name suggests, an MLP has the tax benefits of being a limited partnership; however, it also trades on a public exchange, opening the doors to better liquidity. ETP stands out among its peers because of the 35,000 miles of natural gas pipelines it owns, with plans to build out additional networks to supply Mexican power plants soon. The stock pays out a staggering 6.7% dividend, attracting other large investors like Oppenheimer Funds.

Regency Energy Partners (NYSE: RGP) is actually another MLP within the Energy Transfer family, focusing its efforts more on the collection, transport and storage of natural gas liquids. Similar to ETP, RGP pays out a monster dividend, clocking in at 6.9%.  Regency has been acquisition-hungry recently, purchasing $1.6 billion worth of assets from Hoover Energy Partners and Eagle Rock Energy Partners in the past few months. 

Outside of its energy-related holdings, UTIMCO’s equity portfolio contains a healthy allocation to real estate investment trusts (REITs). Vornado Realty Trust (NYSE: VNO) is one of the largest commercial real estate owners in the U.S., operating mainly on the Eastern Seaboard. Despite paying the lowest dividend on this list at 2.8%, VNO has posted excellent gains over the past 12 months, rising over 20% as its markets (such as New York and Washington, D.C.) continue to recover and flourish.  

UDR Inc. (NYSE: UDR) is another prevalent REIT in UTIMCO’s portfolio, although UDR’s assets tend to be focused more on apartment communities rather than office and retail like VNO. UDR has surged so far this year, up nearly 17%, prompting a bump up in its dividend. Now paying a forward yield of 4.1% and pushing up against 52-week highs, UDR shows no signs of cooling, with analysts at Zacks expecting a long-term growth rate of 6.3%.  

Risks to Consider: UTIMCO’s equity portfolio is just one piece in its holdings, with real assets (natural sources and real estate) and fixed-income contributing to overall portfolio risk and return.  

Action to Take –> A bulk of UTIMCO’s investments have the same objectives you might desire in your long-term savings, including the need for low risk, protection of capital, and respectable growth and income. Paying close attention to the portfolio moves of these like-minded managers can alert you to macro trends while giving you a few new ideas to implement with your own funds.

P.S. America’s wealthiest investors have long used MLPs and REITs to generate safe, rising income. In our latest High-Yield Investing research, we’ve found another little-known group of investments the wealthy have used to generate dividend yields of 12% or more for decades. To learn more about these special investments, follow this link.