Performance in the Marketplace

Work by the NAIC and other trade groups have helped quantify how good diverse managers are, says Howard Sanders, Founder and Managing Director of Auldbrass Partners. And while he is positive on the outlook for diverse managers, he adds that there needs to be more work to quantify the strong returns for these managers as well as increased lobbying for pension funds to broaden their investment management pools.

Frank Baker, Co-Founder & Managing Partner of Siris Capital Group sees further growth ahead for his firm – larger funds, staff and geographic footprint. He cites a reason for the need to grow is the plethora of “young and hungry” investment professionals Baker says are going to want more responsibilities and opportunities for leadership positions.

CalPERS Chief Investment Officer, Ted Eliopoulos, calls private equity the agency’s top-performing asset class over the long-term and adds that PE has met the agency’s objective of a 300 basis point overperformance relative to its global equity portfolio. He also offers advice for peers looking to establish an effective diverse managers program.

David J. Grain, Founder and Managing Partner of Grain Management LLC, sheds light on his approach to deal-making and how experience has helped him learn how to structure transactions. Mr. Grain, whose firm focuses on the tech/media/telecom space, also shares why he likes the mobile broadband space.

In this clip, David Grain, Founder and Managing Partner of Grain Management LLC, shares his outlook for the diverse managers space. He expects the continued success of such diverse managers as Frank Baker, Robert Smith, Stefan Kaluzny and others to lead to increased confidence from potential capital sources and corporate partners.

Looking ahead to the future of the industry, Patricia Miller Zollar, Managing Director of Neuberger Berman, hopes that every institution that invests in private equity would view emerging managers as a key part of their portfolio. She adds that the continued successes of many diverse firms in the emerging managers space would help prove there.

NAIC member Vista Equity Partners was recently rated the best private equity firm in the world. Patricia Miller Zollar, Managing Director of Neuberger Berman, sheds light on her history with the touted firm and the impact of having a diverse firm so widely praised.

Outperformance has led to increased comfort with investing with diverse managers by union pensions, corporations and endowments, says Joseph Haslip, Chairman of the NAIC. But as public markets have become more constrained, Haslip sees greater allocation towards asset classes like private equity. This could bode well for diverse managers, who are well positioned in those classes to deliver returns to those investors.

Joseph Haslip, Chairman of the NAIC, cites outperformance and strong inflows into the diverse hedge fund space, making it strong relative to the broader private equity industry. He also notes that large pension funds and other allocators embracing hedge funds as a trading strategy rather than an asset class are creating new opportunities for diverse managers.

As a former limited partner, Joseph Haslip, Chairman of the NAIC, understands the concerns regarding management fees and what can be a struggle by pension funds to meet their actuarial rate of return. However, he cautions against giving up the performance that can help allocators achieve returns for the benefit of a cheaper manager.

Joseph Haslip, Chairman of the NAIC, shares some of the changes that have occurred within the diverse marketplace since his days as Assistant Comptroller for Pensions for New York City. Among them are increased efforts to recruit and promote women within the industry, through a partnership between the NAIC and the American Investment Council (AIC). He also cites the Diverse Asset Managers Initiative and its efforts to make the case and showing best practices to invest with diverse asset management firm as catalysts for further evolution.