More pension funds are exploring on-site knowledge programs with money managers as part of their strategic partnerships.
Under these programs, pension funds and money managers often will share their employees with their partners for as short as a week or as long as three months.
The most ambitious example is the strategic partnership between the $112 billion Texas Teacher Retirement System, Austin, and two of its private equity managers — Apollo Global Management and Kohlberg Kravis Roberts & Co. Each manages up to $3 billion for the pension fund.
As part of the funds-of-funds arrangement with the firms, pension fund officials established a “cross-training” program for investment staff.
Under the program, Texas Teachers' staff members relocate for up to three months to one of the two firms and then “bring back their experience to share ... and use the experience to advance returns of the trust in the long run and enhance the partnership capabilities between TRS and the firm,” according to the minutes of a board meeting last July.
TRS is being reimbursed by each partner up to a maximum total of $100,000 a year for expenses incurred by any employees participating in the cross-training program, the minutes show.
Staff members also would have to return to the pension fund after the assignment, according to the minutes.
Efforts to interview investment executives at Texas Teachers last week were unsuccessful. But Howard Goldman, director of communications, wrote in an e-mail the program is “still in its early stages as we determine how it can best serve our needs and those of our key partners.”
Programs can also place money management employees at the client’s office. For example, the South Carolina Retirement System Investment Committee, Columbia, which oversees the $26.6 billion South Carolina Retirement Systems, is hosting a portfolio manager from Apollo as part of its strategic partnership program and has done so in the past with others.
“Apollo is an example of an investment manager with whom we have a strategic partnership and who has provided knowledge-sharing services to us over the years,” said committee spokesman Danny Varat in an e-mailed response to questions. “They have sent staff to our offices to advise on both back-office and front-office issues. We do not provide remuneration to firms when they offer such services. We believe these information-sharing relationships provide a great deal of value to the trust, and we plan to continue them when and where it benefits the portfolio.”
Mr. Varat confirmed South Carolina has had knowledge-sharing programs with other managers but declined to name them.