Illinois launches emerging managers FoF search

The search is part of the $13.6bn system’s Manager Diversity Programme, which is dedicated to investing in firms owned by minorities, females or people with disabilities.

The State Universities Retirement System of Illinois approved its staff recommendation to proceed with a search for an emerging manager fund of funds search, chief investment officer Daniel Allen told Private Equity International.

The fund of funds commitment will be within a range of $25 million to $40 million. A request for proposal for the fund of funds is expected to go out in November, he said. 

The $13.6 billion retirement system had included a possible search for a fund of funds dedicated to firms owned by minorities, females or people with disablities in its fiscal year objectives for the 2013 fiscal year, according to documents released Tuesday. In accordance with legislation approved by the Illinois General Assembly, SURS is supposed to dedicate 10 percent of its private market investments to firms owned by minorities, females or persons with a disability. 

The retirement system’s Manager Diversity Programme – which is dedicated to emerging managers – includes 18 fund managers controlling approximately $1.2 billion, according to documents. The programme covers equities, core fixed income, real estate, TIPS and private equity managers. 

Illinois SURS had $1.1 billion invested in private equity as of 30 June, good for 8.3 percent of its total portfolio, according to documents. The retirement system has a 6 percent target allocation to the asset class. 

As Illinois SURS expands its emerging managers programme, The California Public Employees’ Retirement System appears to be backing away from the strategy. Although the $236.8 billion retirement system awarded Credit Suisse a $100 million mandate to invest in emerging managers earlier this year; that pales in comparison to the $1 billion it had committed to emerging managers between 2006 and 2009. 

“It’s not my job to make managers happy,” Dear said at a hearing last week hosted by two California state senators examining emerging manager strategies. “I recognize our restructuring work and our focus on performance have caused some concern among the emerging manager community.”