The $167.2 billion Texas Teacher Retirement System, Austin, is celebrating the 15th year of its emerging manager program with benchmark-beating performance.
As of Sept. 30, the aggregate return of the emerging managers in the program was 8.6% for one year (benchmark, 6.6%); three years, 11.1% (9.7%); and five years, 9.6% (8.5%), said Kirk Sims, senior investment officer and head of the emerging manager program, during a presentation Friday to the board of trustees.
Multiyear returns are annualized.
Mr. Sims emphasized the alpha generated by the emerging manager program as of Sept. 30: one year, 207 basis points; three years, 142 basis points; and five years, 117 basis points.
"It would be great if we could get this kind of performance from our larger managers," said Jarvis V. Hollingsworth, chairman of the Texas Teacher board, during the meeting, adding, "the program is achieving the goals we set."
Jase Auby, TRS' CIO, said, "This is a performance-driven program and we've seen that over the past five years."
Assets committed to emerging managers in the program total $5.7 billion; assets allocated to date total $3.8 billion, according to Mr. Sims' report to trustees.
Mr. Sims said among emerging manager program highlights in 2019 was approval of commitments totaling $633 million to 29 managers.
Over the longer term, Mr. Sims said 52% of total allocations since inception were to diverse managers, with 64% of allocations made in 2019 going to minority- and women-owned firms.
Over the 15-year period, TRS invested with 179 managers for a total of 272 investments. Seven emerging managers were promoted to full portfolio manager status and now manage a collective $2.8 billion for the system, Mr. Sims' report showed.
Mr. Sims also updated trustees about the system's annual emerging manager conference, which will be held Feb. 26 in Austin, noting that 1,850 people have registered for the event and urged trustees to attend.
Mr. Sims said that he and his team have "assembled 29 other (limited partners) to meet with emerging managers during the conference" with an eye toward potential investment.
Mr. Auby told trustees, "This is Kirk's innovation (for the conference) since he took over the program."
Mr. Sims was appointed to head TRS' emerging manager program in February 2019.
