Kyle Bass Urges Texas Fund to Hold Gold Hedge

Kyle Bass, the Dallas hedge-fund manager, urged overseers of Texas (STOTX1)’s state university endowment, the second-largest U.S. college fund, to stick with a $1 billion investment in gold bullion even as the fund’s assets decline. “I’m against selling any of the gold,” Bass said today at a meeting of fund directors in Austin, citing the need for a hedge against mounting risks driven by government deficits in the U.S. and Europe. “As every day goes by, I see deflation in the things you own and inflation in the things you need.”

The $19.1 billion in endowment funds overseen by the University of Texas Investment Management Co., or Utimco, lost almost 3.8 percent on invested assets in the four months through December, preliminary figures distributed today show. The Standard & Poor’s 500 Index of shares gained almost 4 percent over the same period, including reinvested dividends. In 2011, the Texas fund’s allocations rose in real estate, natural resources and hedges to protect against slumping equities. Kyle Bass, a managing partner at Hayman Capital Management LP and a Utimco trustee who isn’t related to Lee Bass, faulted the world’s biggest central banks for expanding the money supply by what he said was $15 trillion during the past five years. In April, he advised the fund on holding gold bars rather than futures contracts.

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