CalSTRS AND CalPERS Unveil Emerging Managers and Financial Services Database
Helps public pension funds track emerging investment managers, providers
Sacramento, CA – The California State Teachers’ Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS) today unveiled a groundbreaking database of more than 700 emerging managers and financial service providers.
CalSTRS and CalPERS aim to expose public and private pension funds and other institutional investors to a new universe of emerging investment firms in an effort to boost investment returns by building investment portfolios that tap into the changing demographics and talent emerging in California and the nation.
Altura Capital of New York developed the comprehensive directory of emerging and under-capitalized managers, funds, partnerships, consultants, researchers, and broker-dealers in 11 asset classes.
Many of the 721 participants in the Emerging Managers and other Financial Service Provider (EMFSP) database have high percentages of employee ownership, and diverse experience in historically underserved markets.
“It’s said at the ballpark that you can’t tell the players without a program, and this database does that for us. It tells us who is on the small end of the market that we may not have knowledge of, or the resources to find on our own. This tool helps us to scout promising talent to nurture for potentially solid investment payoffs as the managers and funds mature,” said Christopher J. Ailman, Chief Investment Officer for CalSTRS.
The EMFSP database captures the universe of emerging financial service firms, creates an industry reference guide, promotes information transparency and broadens opportunities for adding value to institutional investors’ portfolios from a largely untapped pool of talent. It also gives plan sponsors, corporations, endowments and institutional investors across the nation exposure to a wide gamut of new investment options. The database received inquiries from 75 foreign countries, and 44 firms in 18 different countries ultimately provided data. Almost half of the 721 participants are based in California and New York, 70 percent of the firms have 10 or fewer employees, and 35 percent have operated for fewer than two years.
One-third of the participants are money managers, followed by hedge funds, at 28.4 percent; private equity funds, at 13.6 percent; and broker-dealers, at 8.9 percent. Participants in other categories had single-digit shares of the total database.
“We know a lot about the big managers and funds, but it’s easy to miss emerging firms that are still struggling to raise capital,” said Russell Read, CalPERS Chief Investment Officer. “Most large firms started at the small end of the market and we want to find them on the small end of their asset class. Then we won’t have to stand in line for their services on the big end later.”
Altura Capital solicited entries for the pool after CalSTRS and CalPERS announced the enterprise in April 2006. The Altura Capital Web site targeted money managers, private equity funds, private equity fund of funds, private real estate investments firms, REITs, hedge funds, hedge fund of funds, consultants, emerging manager program managers, broker dealers and research firms.
The database is available to plan sponsors, endowments, corporations and institutional investors
“We’re making a continuing effort to scout these managers and invite them to participate in the database,” said Monika Mantilla, CEO and President of Altura Capital. “We’re anticipating an even larger, better sample set that we will stay on top of, given the extreme dynamism of these organizations.”
With a $156 billion investment portfolio, the California State Teachers’ Retirement System is the second-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s 776,000 public school educators from kindergarten through community college.
CalPERS is the nation’s largest public pension fund with assets totaling more than $225 billion. The System provides retirement and health benefits to approximately 1.5 million State and local public employees and their families.