September 22, 2022
A comprehensive list of emerging manager programs offered by pensions, endowments, and other sponsors
Getting a new fund off the ground is no easy task. It requires significant support, advice, resources, and – of course – investment.
A number of pension funds and endowments have recognized the challenges that emerging managers face and the opportunity they present – and they’ve put together an offering to capitalize on that overlap. The result: emerging manager programs.
What is an emerging manager program?
An emerging manager program is a program offered usually by a pension fund or endowment where they allocate a certain amount of their portfolio to be invested specifically in an emerging manager. Emerging managers are generally defined as managing assets below a certain threshold, as having launched only a certain number of funds, or as an investment fund that is majority owned by those traditionally underserved and excluded in the industry – specifically women and people of color.
Some emerging manager programs focus on one of these definitions, some include all three, just as some focus on a specific area or asset class while others are all-encompassing.
We offer the below as a helpful resource: Our ultimate list of emerging manager programs, for those looking to connect up their new and novel investment strategies with the right fundraising sources. If you know of a program that’s missing from the list, please let us know.
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The ultimate list of emerging manager programs
Sponsor: California Public Employees’ Retirement System
Asset Classes: Global Equity; Private Equity; Real Estate
Parameters: Varies per asset class program
Description: With a track record of investing in emerging and first-time funds for more than 25 years, the CalPERS (California Public Employees’ Retirement System) Emerging Managers Program looks to access unique investment opportunities that might otherwise be overlooked while simultaneously cultivating the next generation of portfolio management talent.
Sponsor: Connecticut Retirement Plans and Trust Funds
Asset Classes: Range of public and private asset classes
Parameters: Varies per asset class program
Description: The Connecticut Inclusive Investment Initiative targets investments with emerging and diverse managers across both public and private asset classes and will provide a pathway for growth of the best emerging managers in the industry.
Sponsor: Duke University
Asset Classes: Range of public and private asset classes
Parameters: Varies per asset class program
Description: “DUMAC has a history of investing in emerging managers, providing essential seed and anchor capital on numerous occasions, including to emerging managers that are diverse owned (i.e., persons identifying as non-white, women, or other gender minorities) and where diverse individuals are key principals.”
Sponsor: GCM Grosvenor
Asset Classes: Private Equity, Absolute Return, Real Assets
Parameters: Varies per asset class program
Description: GCM Grosvenor, a fund of funds manager with AUM of $71 billion, looks to be a strategic investor in funds started by emerging and diverse managers. It serves as a seed investor and a catalyst for fundraising.
Sponsor: HarbourVest Partners
Asset Classes: Private Equity, Absolute Return, Real Assets
Parameters: Varies per asset class program
Description: “These are investment programs that seek to drive capital toward newer managers as well as funds that are female and/or minority-led. These strategies, which may be used together or individually, focus on:
- Emerging managers (primarily first-, second-, or third-time funds)
- Diverse managers (female and/or minority general partners)
- Underserved markets (funds that invest in companies that have historically lacked access to capital)”
Sponsor: Los Angeles Fire & Police Pensions
Asset Classes: “This portfolio strives for diversification among strategies (buyout, venture capital, special situations), sectors, and geographies.”
Parameters: First-, second-, and third-time funds that are approximately $100 million to $500 million in size are allowed to participate in the program.
Description: “LAFPP’s Specialized Manager program dates back to 1996. Since that time, LAFPP has made commitments to specialized private equity emerging managers that have included firms with minority-, women- and Lesbian, Gay, Bisexual, Transgender and Queer- (LGBTQ) ownership. Additionally, LAFPP has made fund commitments to emerging managers that are based in the City of Los Angeles or California, or targeted investments in economically disadvantaged markets.”
Sponsor: State of Michigan Retirement System
Asset Classes: Private Equity; Growth Equity; Venture Capital; Credit; Real Estate; Real Return
Parameters: Assets Under Management: Firms that manage less than $3 billion; Target Fund Size: Preference for Funds less than $1 billion; Generation: Fourth generation or earlier institutional funds
Description: “The Michigan Small Emerging Manager Program is a $300 million program that invests across small and emerging manager fund, co-investment, and secondary opportunities. The target strategies for the program include private equity buyouts, growth equity, venture capital, special situations, real estate, infrastructure, credit, and real return opportunities.”
Sponsor: Massachusetts Institute of Technology Investment Management Company
Asset Classes: Not listed
Parameters: “While we don’t find it useful to try to publicly articulate all our selection criteria, one over-arching quality we look for in potential partners is a heavy bias towards investing their fund the way they think is best to invest their own money, rather than designing their strategies and organizations to have broad LP appeal.”
Description: “Our approach to emerging managers is simple yet unconventional: we want to identify firms who will produce some of the most attractive investment returns of their generation, form multi-decade win/win partnerships with them, and join their journey very early on.
“Here is what we offer the handful of new emerging managers we partner with each year:
- We do not ask for GP ownership or profit sharing, as we believe these seed deal arrangements misalign incentives and reduce the manager’s competitive advantages.
- We commit ten year capital to emerging stockpickers and hedge funds in order to give them a stable income stream and minimize short-term pressure to perform.
- We commit fully discretionary fund capital to emerging private managers in areas such as real estate, private equity, and venture capital in order to give them visibility and control in their asset base.”
Sponsor: New Jersey State Investment Council
Asset Classes: Private equity
Parameters: $250 million has been allocated through a separately managed account managed by Barings LLC
Description: “The Barings investment will broaden the pension fund’s diversification, help the division access smaller managers, and capture potential attractive returns in small to mid-size growth and buyout funds. Barings has a reputation for employing an open-door policy and a proactive origination program that includes a network of relationships, including members of its team who serve in leadership roles in organizations focused on increasing women and diverse representation in the asset management industry, such as the Toigo Foundation, the Hispanic Heritage Foundation, NAIC, and PEWIN.”
Sponsor: New York City Retirement System and Comptroller’s Office
Asset Classes: Public Markets (Equity & Fixed Income); Private Equity; Real Estate; Opportunistic Fixed Income; Hedge Funds
Parameters: Varies per asset class program
Description: “The New York City Retirement Systems and the Comptroller’s Office are dedicated to identifying and investing with top performing fund managers that demonstrate exceptional potential and are committed to diversity in their investment decision-making process, ownership structure, compensation, and profit-sharing policies.
“The Emerging Manager Program seeks managers that meet the following minimum criteria:
- Significantly experienced investors that can generate competitive risk-adjusted returns and manage funds which may have shorter track records than more established managers.
- Institutional quality operations with established front/back office, systems and risk management including reputable administrators, auditors and an independent third-party pricing source where appropriate.
- Broad institutional capital base with significant General Partner investment.”
Sponsor: New York State Common Retirement Fund
Asset Classes: Public Equity; Private Equity; Fixed Income; Real Assets; Real Estate; OARS
Parameters: Varies per asset class program
Description: “The Emerging Manager Program offers opportunities to newer, smaller and diverse investment management firms to help grow the State’s Common Retirement Fund. The Fund is one of a few public pension plans to establish an emerging manager program and has committed $7 billion into the program.”
Sponsor: Teachers’ Retirement System of Texas
Asset Classes: Private Equity; Real Estate; Energy, Natural Resources & Infrastructure (ENRI); Long-Only; Hedge Funds
Parameters: Varies per asset class program
Description: Established in 2005 and one of the largest Emerging Manager Programs in the US, the TRS Emerging Manager Program is “designed to identify and grow the next generation of exceptional, high performing managers.”
Sponsor: Teachers’ Retirement System of Illinois
Asset Classes: Global Equity; Global Income; Private Credit; Private Equity; Real Assets; Real Estate; Diversified Strategies
Parameters: Varies per asset class program
Description: “The TRS Emerging Manager Program seeks developing investment managers who show promise to invest successfully on behalf of TRS. The Emerging Manager Program is open to investment managers across all current TRS asset classes.”
