SAN JOSE, Calif. — Pension funds generally ward off new managers with a stick, telling them to come back after they have a three-year track record.
But last week, CalPERS and CalSTRS put out the welcome mat to minority and emerging firms. At a jointly sponsored conference on investing in "diversity" fund officials educated firm executives on how to compete for pension fund dollars. The conference drew 600 registrants, with others turned away because of fire marshal rules.
The initiative is expected to usher in the next wave of hirings of minority managers. While the program loosely was geared toward "emerging" managers — defined as those having less than $2 billion in assets under management — as well as brokers and consultants, the tenor of the comments clearly was targeted at minority managers.
And it's not only the $208.3 billion California Public Employees' Retirement System and the $145 billion California State Teachers' Retirement System, both of Sacramento, with well-established emerging manager programs, who are in the game.
Other pension funds that reportedly already run or plan to run emerging manager programs include: the New York City Retirement Systems, the State Universities Retirement System of Illinois, the Michigan Municipal Employees' Retirement System, the San Francisco City & County Employees' Retirement System and the Kansas City (Mo.) Public School Employees Retirement System.
CalPERS' and CalSTRS' efforts went beyond free advice. They provided conference participants with lists of names and phone numbers of whom to call at the giant funds.
They also jointly launched a database of emerging managers and financial service providers. That initiative targets money managers, private equity fund and fund of funds, real estate managers, REITs, hedge funds and funds of funds, consultants, emerging manager programs, brokers and research firms. The database, which firms can join free at consulting firm Altura Capital's www.alturacap.com, will be available free to other institutional investors.
"Hopefully, a lot of minority and emerging firms will understand what they have to do to get themselves in the loop," Charles Valdes, chairman of CalPERS' investment committee, said in an interview.