FROM: Don Pierce, Chief Investment Officer
SUBJECT: 2021 Emerging Market Equity Manager Selection
RECOMMENDATION:
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Approve a $100mm initial subscription to William Blair Investment Management's Emerging Markets Growth and a $100mm initial subscription to Wasatch Global Investors' Emerging Markets Select products, subject to completion of due diligence and legal document review.
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BACKGROUND:
In March 2021, SBCERA initiated an RFP for Emerging Market ("EM") equity investment management services with the objective and impetus of making a well-informed manager selection from a diverse set of responses.
A progress update of the RFP was shared with the Investment Committee in August 2021. At the meeting, SBCERA's stated objective was to identify up to two finalist managers for consideration.
As highlighted in staff's oral report at the August Board meeting, a total of 72 investment managers responded to SBCERA's RFP in March. Staff and NEPC independently reviewed the responses and followed a thorough vetting process involving quantitative and fundamental measures to identify managers that would be an appropriate fit for SBCERA's EM equity portfolio. Some of the quantitative screens included reviewing both absolute and relative measures on performance and volatility, upside/downside capture, and correlation with other strategies. From a fundamental perspective, staff and NEPC focused our review on understanding the investment process including decision making, execution of trades, team strength and stability, and importance of the EM equity strategy to the firm.
Staff and NEPC reviewed the top seven finalist managers in depth. In this stage, the following criteria formed the bulk of our analysis:
* Asset management firm resources, reputation, and area of expertise.
* Portfolio management team for tenure, depth, and stability.
* Strength in process, sound philosophy, client tenure, and implementation.
* Performance history for consisten...
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