Texas Teachers to allocate $1.3bn to emerging managers

The Teacher Retirement System of Texas has renewed its commitment to supporting ‘emerging’ investment managers and plans to provide $1.3bn (€1.2bn) in capital for a dedicated programme over the next three years.

The $125bn fund has been running an emerging manager programme over the past decade, investing with managers that are either small in size or newly established.

The expansion of the programme – which covers real estate, natural resources, private equity and public equity – was revealed last week at a conference sponsored by Texas Teachers and another pension fund, the Employees Retirement System of Texas.

The new capital could go to existing clients of Texas Teachers and also new managers.

The pension fund has previously invested with Swift Real Estate Partners, Pennybacker Capital and Savanna Real Estate Partners, which pursue US regional investment strategies on the West Coast, in Texas and in New York, respectively.

Texas Teachers typically makes allocations to emerging managers of between $15m and $50m; it usually commits $150m to more established companies.

Sylvia Bell, managing director of the emerging manager programme, said: “We are pleased with our success in finding good managers to help the programme grow.

”We have a commitment to transitioning managers from their first allocation through a bridge allocation to core manager status and ’master trust level’ allocations.

”To date, over $1.4bn in core allocations are managed by firms that started in our emerging manager programme and who have demonstrated proven and continued success.”

Texas Teachers has been working with GCM Grosvenor, another sponsor of the conference, on the emerging manager programme.

R David Kelly, chairman of the pension fund board, said: “We hope to leverage Grosvenor’s market coverage to source managers, their robust analytical capabilities and their comprehensive due diligence, so TRS can concentrate its efforts on selecting managers that provide the greatest return given our strategy.

“We believe this will be a more streamlined process, reduce the churn of going back and forth, and provide us with an ability to commit dollars and grow with proven managers.”