Institutional Investors Launched Custom ETF Strategies
Large public endowments are shifting to custom exchange-traded funds to gain market exposure and secure portfolio capacity.
Updated on Oct. 14, 2026 in Investing
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The University of California and the Texas Permanent School Fund recently launched bespoke exchange-traded fund strategies to manage their multibillion-dollar asset portfolios. These institutional moves represent a broader trend of large investors seeding new products to achieve specific financial goals.
Why it matters
By collaborating with asset managers to seed new ETFs, these large institutions aim to secure favorable pricing and gain access to specialized market exposures. These strategies illustrate how large-scale investors are moving beyond traditional funds to manage their risk and return targets more effectively.
The University of California seeded its index strategy with $2.5 billion, while the Texas Permanent School Fund invested $740 million into a credit-focused ETF. These figures represent a fraction of the $236 billion and $65 billion total assets managed by the respective institutions.
The players
University of California Board of Regents
The governing body managing $236 billion in assets, including the Blue and Gold Endowment Pool.
Texas Permanent School Fund
A state-managed endowment fund overseeing $65 billion in total assets.
Apollo
An asset manager that supplied 21.93% of the holdings in the IG Public and Private Credit ETF.
The details
The University of California's 90/10 Endowment Strategy Index ETF combines S&P 500 equity exposure with short-term corporate bonds. Meanwhile, the IG Public and Private Credit ETF used by the Texas Permanent School Fund targets 80% investment-grade holdings, allowing for smaller allocations to high-yield and illiquid assets to boost potential returns.
Timeline
May 2026: Texas Permanent School Fund purchased shares of the IG Public and Private Credit ETF.
September 2026: University of California Board of Regents launched the 90/10 Endowment Strategy Index ETF.
October 9, 2026: Reporting date for holdings sourced by Apollo in the IG Public and Private Credit ETF.
Money Landscape
These launches follow the growing institutional trend of seeding custom exchange-traded fund products to secure capacity and access. This approach marks a shift from solely utilizing off-the-shelf market products to building custom vehicles that mirror specific internal portfolio goals.
While institutional moves provide insights into asset allocation, personal investors should focus on maintaining a diversified portfolio tailored to their own risk tolerance. Consult a qualified financial professional to determine if your investment mix remains appropriate for your specific goals.
The takeaway
Institutional investors are increasingly creating bespoke funds to lower costs and gain specific market exposures. While these strategies are designed for multibillion-dollar endowments, individual investors should regularly review their own portfolio allocations against their long-term financial goals.
Further reading
For broader trends in portfolio management, visit the Investing section.
Source note: This article includes information reported by Chief Investment Officer.
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