Metropolitan Transit Authority of Harris County, Houston, will require at least one emerging money manager to be included in every manager search the transit authority’s $230 million union pension fund and $148 million non-union plan conducts.
The rule is named the “Garcia Rule” after Gilbert A. Garcia, chairman of the board of directors, taking a page from the National Football League’s “Rooney Rule” that requires at least one minority candidate for coaching and front-office positions.
The transit authority defines emerging managers as “woman-owned, minority-owned, veteran-owned, disabled American-owned or firms less than $1 billion in asset size at the time of hiring,” said a news release from Houston METRO. The plans’ investment consultant, Marquette Associates, conducts searches for the pension funds.
Mr. Garcia is also managing partner of fixed-income money manager Garcia Hamilton & Associates, which is 85% MWBE-owned and has about $6 billion in assets under management.
“I think the rule benefits everybody,” Mr. Garcia said in a telephone interview. “The plan gets exposure to smaller firms, which I think with today’s desire for alpha, the plans need to look everywhere for the alpha, and smaller firms in my view now have a competitive advantage in today’s lack-of-liquidity environment, and I also believe smaller firms typically see senior people own the firm and that brings a whole level of intensity to how they approach the market, how they approach client service and how they manage the business.”
