The NAIC Institutional Investor Forum is a members-only event that brings together high ranking investment managers with limited partners and government officials to share insights and market intelligence as well as network.
NAIC Institutional Investor ForumsThese forums also give potential investors an opportunity to connect with NAIC members and provide a platform to discuss manager performance, investment strategies and relevant emerging manager programs. These exclusive events are for institutional investors, government officials, and C-level investment executives who want to interact and build relationships.
NAIC made its third Road Show stop this year to connect with Pittsburgh’s institutional investors – mainly endowments, foundations and family offices. The lunch meeting took place at The Duquesne Club and was co-hosted by the Carnegie Mellon University (CMU) endowment. The meeting was initiated by Carnegie Mellon Investment Committee member and alumnus Larry Jennings.
There were 13 participating representatives from nine capital allocators, including:
- BNY Mellon: With a $1 billion portfolio, BNY Mellon raises money every 18-24 months. The average BNY Mellon check size is $5-10 million.
- Carnegie Mellon University: The $2 billion endowment has a 50% allocation to private equity and a 10% allocation to hedge funds. Over time, the average check size has moved to $20 million per fund (from $5-10 million historically). CMU makes allocations with an eye towards tripling the commitment to work with managers across multiple funds. CMU does not have an emerging manager program, but prefers smaller (less than $1 billion) funds.
- Heinz Endowments: Among the largest independent philanthropic organizations in the country, Heinz Endowments approves $60 million in grants on average, to non-profit organizations each year. Heinz Endowments has $1.5 billion in assets with a 25% allocation to hedge funds and an over 30% allocation to private equity with an overall 8% target return.
- Heinz Family Office: Heinz has a 20% allocation to private equity. Of its private equity, 30-50% of its allocations are to emerging managers and selected by its internal team. The core private equity portfolio is managed externally by Cambridge Associates.
- Hillman: One of the country’s largest single-family offices has been managing foundation assets, consolidating private foundations and the long-term pool of taxable assets. In private equity, Hillman employs “a bottoms-up, opportunistic” strategy. Their team likes four defensive industries and tends to avoid capital intensive strategies. They have an open-door policy but does not add many new relationships per year.
- Pittsburgh Foundation: The foundation represents 3,100 charitable funds with $1 billion in invested assets, which is driven by donors. In 2009, Pittsburgh Foundation created a discretionary portfolio with $280 million of assets. Their 16% allocation to private equity is on the lower end for Pittsburgh allocators (check sizes are approximately $2 million).
- University of Pittsburgh: This is a $4 billion endowment with an 18% allocation to “non-marketables,” 16% allocation to real assets (includes real estate and energy), and a 20% allocation to hedge. The endowment has a $15-25 million bite size for fund commitments. They are consulted by Cambridge Associates, which they use mainly for research.
- University of Pittsburgh Medical Center: This is the largest private employer in Pennsylvania with over 65,000 employees. Their general objective to grow the various UPMC pools and mandates. UPMC has an open-door policy for meeting new managers and has $1.6 billion in assets and a 25% allocation to alternatives.
- Wilshire Private Market: Their team is comprised of 40 people across venture capital, buyouts, distressed, and real assets and offices in Santa Monica, Amsterdam, Hong Kong, and Pittsburgh. From Wilshire’s discretionary capital, the firm makes 15-20 commitments annually. All of Wilshire’s commitments are to funds below $1 billion. Wilshire invested with NAIC members Sycamore and Valor, but that they do not continue to back managers once they move up in size. Wilshire’s advisory team makes 40-50 commitments per year and a is supportive of emerging managers, though there is not a designated emerging manager mandate.
The final National Association of Investment Companies Road Show for 2016 visited Sacramento where 11 members participated in two meetings hosted by CalPERS and CalSTRS, the two largest public pension plans in the U.S.
As NAIC has had a meaningful level of interaction with both CalPERS and CalSTRS over the years. We prioritized using the time with each plan to provide an update and allow each member the opportunity to share more information about their firm and fundraising activities. The meetings were very well attended by the senior investment staff of each hosting public plan. During the sessions, NAIC members received an update on the plans that CalSTRS and CalPERS have for their Emerging manager programs and described their firm, strategy, and current offering.
- The California State Teachers' Retirement System (CalSTRS) is an approximate $189 billion plan with roughly 800,000 members. CalSTRS is currently making 30 private equity commitments per year between $50 million to $500 million on average. Three feeder fund of funds -- Muller & Monroe, Harbourvest Horizon, and Invesco -- allocate on CalSTRS’ behalf to newer funds with commitments in the $10 million to $20 million range.
- Representatives from Pavilion, a private equity and real assets consultant to public funds, sovereign wealth funds and family offices, then provided an overview of the firm. Pavilion was formed through the combination of Altius and LP Capital Advisors.
- Ted Eliopoulos, CIO of the California Public Employees' Retirement System (CalPERS) said the board is very comfortable discussing the plan’s strengths, especially in private equity, which he shared has outperformed the public benchmarks by 300 to 500 bp in every measured period, apart from quarterly. CalPERS' Investment Management Engagement Programs (IMEP), formerly the Targeted Investments Program, is currently evaluating the external managers who allocate $90 billion of CalPERS’ $290 billion in assets (as of December 31, 2015). IMEP’s primary focus is reducing complexity and costs. This is to be accomplished through manager reductions and surveying peers to identify other potential measures before releasing a new business plan.
- Maryland State Retirement and Pension System, which manages approximately $46 billion
- Pavilion Alternatives Group, which has 46 clients, including several large public pension plans
- Brown Advisory, which was spun out of Alex Brown and has $57 billion in assets under management
- American Trading and Production Corporation, a $1 billion family office;
- District of Columbia Retirement Board, which has a $6.5 billion investment portfolio
- Annie E. Casey Foundation, which has $2.5 billion in assets under management
- NEPC is one of the industry’s largest independent, full-service investment consulting firms, serving over 300 retainer clients with total assets over $900 billion.
- Meketa Investment Group is a full-service investment consulting and advisory firm whose bite sizes for clients range from $3 to 5 million up to $50 million (for allocations across multiple clients).
- Cambridge Associates is an advisor whose clients have assets exceeding $1.5 trillion, with Cambridge overseeing over $150 billion worth of assets – $39 billion in hedge funds and $27 billion in private equity.
- Massachusetts Pension Reserves Investment Management Board (PRIM) manages over $60 billion in assets ($6.8 billion in private equity).
- Los Angeles County Employees Retirement System (LACERS): A $14.1 billion diversified plan with 12% in Alternative Investments that allocates $325 to $350M per year.
- Los Angeles Fire and Police Pensions (LAFPP): $18.36 billion in assets with a 10% allocation target for private equity.
- Los Angeles County Employees Retirement Association (LACERA): A $46.8 billion plan with a 9% ($4.378B) private equity allocation.
- Chicago Teachers Pension Fund (CTPF), a $10.5 billion pension fund
- Muller & Monroe, which manages almost $700 million of capital, with more that 60% of that allocated to minority funds.
- Exelon's $34 billion pension plan
- Illinois Municipal Retirement Fund (IMRF), which serves almost 3,000 employers and has approximately $33 billion in assets
- Illinois State Board of Investment (ISBI), which has $19 billion in AUM ($15 billion in the DB plan)
- Illinois State Universities Retirement System (SURS), a $16 billion retirement plan