Key Takeaways
- • MassPRIM, the Massachusetts Pension Reserves Investment Management Board, committed $50 million each to three emerging hedge fund managers, totaling $150 million, per Institutional Investor.
- • The three allocations are to London-based Alcova Asset Management, New York-based CKC, and Boca Raton, Florida-based Global Sigma, with initial investments placed in September 2018.
- • The first allocations under the emerging hedge fund manager program follow a search approved nearly two years earlier, and the program targets a total of $500 million over the next 12-18 months.
- • MassPRIM defines "emerging" managers as those with less than $500 million in assets and requires at least 18 months of live trading before investment.
- • Investments are structured as managed accounts, the format used for about 80 percent of MassPRIM's hedge fund holdings, with NewAlpha and Innocap serving as advisers.
Summary
The Massachusetts Pension Reserves Investment Management Board (MassPRIM) has invested $50 million each in three firms through its emerging hedge fund manager program, according to Institutional Investor. The allocations, totaling $150 million, are the first the pension has made through the program since the search was approved nearly two years ago. The managers selected are London-based Alcova Asset Management, New York-based CKC, and Boca Raton, Florida-based Global Sigma. The firms did not respond to requests for comment before publication.
MassPRIM chief strategy officer Eric Nierenberg told Institutional Investor that the three managers each bring exposures the portfolio lacks. "In all three cases, they are doing something we don't have," he said. He added that the program seeks managers using eclectic strategies that are not easy to find and do not necessarily scale.
The program's history dates to late 2016, when the pension system approved a request for proposal for outside advisers. The RFP was issued about a year later. The pension hired NewAlpha to advise on hedge fund manager due diligence and Innocap to provide managed account services. Initial allocations were made in September 2018.
MassPRIM defines emerging managers as those with less than $500 million in assets under management. Nierenberg said the fund does not make day-one investments; firms must have been operating with live trading for 18 months. Investments are placed in managed accounts, the structure used for roughly 80 percent of the pension's hedge fund investments. Nierenberg acknowledged that sourcing and vetting emerging managers requires substantial work, but said external consultants have assisted with screening and due diligence.
The program ultimately aims to invest $500 million, with a target timeline of 12 to 18 months. MassPRIM managed $73.8 billion through the end of September 2018, including $6.2 billion in hedge funds.
MassPRIM chief strategy officer Eric Nierenberg told Institutional Investor that the three managers each bring exposures the portfolio lacks. "In all three cases, they are doing something we don't have," he said. He added that the program seeks managers using eclectic strategies that are not easy to find and do not necessarily scale.
The program's history dates to late 2016, when the pension system approved a request for proposal for outside advisers. The RFP was issued about a year later. The pension hired NewAlpha to advise on hedge fund manager due diligence and Innocap to provide managed account services. Initial allocations were made in September 2018.
MassPRIM defines emerging managers as those with less than $500 million in assets under management. Nierenberg said the fund does not make day-one investments; firms must have been operating with live trading for 18 months. Investments are placed in managed accounts, the structure used for roughly 80 percent of the pension's hedge fund investments. Nierenberg acknowledged that sourcing and vetting emerging managers requires substantial work, but said external consultants have assisted with screening and due diligence.
The program ultimately aims to invest $500 million, with a target timeline of 12 to 18 months. MassPRIM managed $73.8 billion through the end of September 2018, including $6.2 billion in hedge funds.
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