Cultivating Opportunities, Harvesting Returns
Fifth Annual Plan Sponsor & Minority Manager Consortium reflects growth trend.
If attendance at this yearâ€™s fifth annual Plan Sponsor & Minority Manager Consortium is any indication, plan sponsorsâ€™ interest in pursuing investment strategies that incorporate emerging manager expertise is growing.
More than one-third of the 400 minority and emerging managers, plan sponsors, consultants and other industry professionals attending this summerâ€™s event were new to the annual forum. Event alumni and newcomers alike benefited from the full-day of interactive sessions â€” all focused on helping emerging managers and those with investment capital to connect. An additional half-day Plan Sponsor-Only session provided professionals in that sector an opportunity to meet independently, network and share best practices in facilitated working sessions.
Emerging Manager Trends Prior to the Consortium, the event organizers NAIC and RG & Associates conducted a brief survey to assess the current state of emerging minority investing and to gain insights into issues or areas of interest among attendees. The survey data revealed:
â€¢ More than 40 percent of survey respondents indicated that investment advisors are considered part of their emerging manager program, based on assets under management (AUM).
â€¢ One-third of plan sponsors surveyed have no formal metric for defining what constitutes an emerging manager.
â€¢ Nearly half (43 percent) identify, review and select their own minority investment advisors versus using outside resources such as consultants.
â€¢ Thirteen percent of plan sponsors rely on a select group of consultants to give them recommendations, with only 4 percent relying on a wide array of investment consultants to identify and screen talent.
â€¢ Some 63 percent of plan sponsor emerging manager programs met the investment return goals set by the fund, with 17 percent indicating their emerging investor portfolios outpaced their goals.
The 2008 Consortium theme, â€œCultivating Opportunities, Harvesting Returns,â€ highlighted the two core objectives of the forum. Since its inception, the goal of the Consortium has been to play an active and meaningful role in helping the plan sponsor community identify and initiate relationships with emerging managers. In its pre-event survey, the Consortium found that 30 percent of past attendees have forged 10+ relationships as a result of their participation. Half of those surveyed indicated the greatest value derived from their participation in the Consortium over time has been the introductions to emerging managers they would not have known.
â€œWe did not have a formal emerging manager program in place prior to attending this yearâ€™s Consortium,â€ says Mannard Packwood, assistant accountant general for the government of Bermuda.
â€œBut, based on the managers and other plan sponsors we met, we are now actively moving toward that strategy.â€ Packwood and his colleagues attended the Consortium together with their consultant from New England Pension Consultants (NEPC).
The experience provided them with â€œtremendous exposure to emerging managers and firms we might not, otherwise, have considered as part of our investment mix,â€ Packwood says.
New York State Common Retirement Fund In-Focus This year marked the launch of the new In-Focus sessions at the Consortium, which will annually feature a plan sponsor team of investment professionals.
The goal of the sessions is to provide attendees with an opportunity to engage in in-depth discussions with one investment team regarding their Investment plans and protocols. The New York State Common Retirement Fund (CRF) was selected for the inaugural session.
“When I committed an additional $1.6 billion to our emerging manager program late last year, my goal was to expand it beyond public and private equity,” says New York State Comptroller Thomas P. DiNapoli. “Absolute return strategies and real estate are the next growth area for our emerging manager program, and the In-Focus session gave us a chance to highlight our open door policy toward investment opportunities and to provide attendees with critical information on what New York is looking for in selecting its investment partners.”
Four asset class-specific workshops â€” including hedge, private equity, public equity and real estate â€” were held, each led by a CRF representative.
The workshop discussions dovetailed with morning remarks made by DiNapoli, who reiterated CRFâ€™s long-standing commitment to emerging managers as a core part of the fundâ€™s investment approach. The In-Focus session was billed as “Part II” of CRFâ€™s Emerging Manager Diversity Roundtable, an event held in February, that this year drew a standing-room only audience. The fund has invested $1 billion with emerging managers in private equity and $600 million in public equity markets.
â€œThe In-Focus format offered attendees a rare opportunity to meet with one fundâ€™s various investment advisors,â€ says Renae Griffin, president of RG & Associates and the founder and organizer of the Consortium. â€œWe are actively reviewing and evaluating what fund to feature at the 2009 In-Focus session.â€ Other Stand-Outs The Consortium agenda provided a host of content-rich choices, with the session titled â€œOpportunities & Challenges Ahead: Women Finance Executives Share Their Insightsâ€ emerging as one of the most popular. A lively interchange of ideas and lessons learned shared among the group proved both educational and inspirational.
â€œThe chance to share experiences with other talented women in the field of finance is important â€” and rare,â€ says Shelley Smith, vice-chair of the Los Angeles City Employees Retirement System (LACERS). â€œThe session was tremendously valuable, with its candid, conversational tone and real-world advice. It underscored the incredible talent that exists within the industry â€” and the aspirations of many more women emerging as leaders in the public pension, investment management and consulting arenas.â€ In an effort to assess the current state of investing, the Consortiumâ€™s industry and investment sessions â€” including gatherings featuring investment professionals within the real estate, private equity/ venture capital and public equity/hedge arenas â€” drew strong attendance.
Findings presented by Kenneth Heinz, president of Hedge Fund Research, underscore the value of diversity in investment portfolios and in the investment professionals that funds rely upon. Heinz presented data for a diversity index of partly or wholly minorityowned hedge fund businesses and noted the strategy mix was different for minority-owned firms compared to hedge funds in general.
Correcting for the difference in strategy mix, hedge fund research found significantly higher returns for the diversity index compared to those of the regular hedge fund universe.
Heading West Next year, the Consortium will be held in Southern California. The 2009 dates for the Sixth Annual Plan Sponsor & Minority Manager Consortium are June 17-18, 2009. Attendee feedback from this yearâ€™s event provided NAIC and RG & Associates with a host of topics to consider as planning starts this fall.
Registration for the 2009 Consortium will begin in late fall. Because of the strong attendance and interest by the plan sponsor community, the Consortium will be held on the same day as the Robert Toigo Foundation Gala (as it has for the past few years in New York.) The Toigo Foundationâ€™s 20th anniversary celebration is scheduled for June 18, 2009, at the Dorothy Chandler Pavillion in Los Angeles.
â€œWeâ€™re proud to play a part in fostering better dialogue within this key market arena and finding ways to help minority and emerging managers shine and gain awareness within the plan sponsor arena,â€ Griffin says. â€œWeâ€™re looking forward to drawing more West Coast-based pension funds and investment managers and, of course, welcoming back past attendees from our New York events.â€
For more information about the Plan Sponsor & Minority Manager Consortium 2009 or to see a recap and photographs from the 2008 gathering, visit www.rgassociates.org.