Emerging Managers

In Kyle’s notes, “emerging managers” is a public-pension / institutional-LP policy term — newer or smaller (often diverse-led) investment firms that large funds-of-funds are pushed to seed. Assembly Bill 2041 — UC Office of the Chief Investment Officer is the central source: the 2018 California bill urges UC Investments (a $118B fund-of-funds LP) to “launch emerging manager programs” and “encourage start-up firms to develop diverse executive teams,” alongside diversity mandates in its own hiring and partner selection. The companion read, Almost $14 Billion Pulled From CalPERS Equity Managers, shows the tension in the term: CalPERS terminated most external equity managers on underperformance grounds, with CEO Marcie Frost’s memo noting that “over the last five years, traditional managers have underperformed their benchmarks by 48 bps and emerging managers by 126 bps” — i.e., the diversity/emerging-manager mandate and the pure-performance mandate can pull in opposite directions.

Context: “Emerging managers” is institutional-investing shorthand for newer investment firms — typically early-fund, smaller-AUM, and often women- or minority-owned. Many public pensions and endowments run dedicated emerging-manager programs to diversify their roster and access early-stage manager outperformance.

Where this appears

• Assembly Bill 2041 — UC Office of the Chief Investment Officer — the bill directs UC Investments to launch emerging-manager programs and encourage diverse start-up firms.
• Almost $14 Billion Pulled From CalPERS Equity Managers — CalPERS memo benchmarks emerging-manager underperformance (126 bps) against traditional managers (48 bps).