Institutional investors are confronting the financial industry’s representation issues directly with dedicated pools of capital for managers that typically face barriers to securing investments – such as firms owned by women or minorities, newly established firms and locally specialized firms.

“The underlying limited partner and their constituent base are themselves diverse, and they want to commit with groups who ultimately do look like them,” says Katie Moore, who sources such opportunities for these pools of capital as Hamilton Lane’s head of emerging and diverse investing.

“For most limited partners, this is typically still a merit-based investment decision,” says Moore. LPs with these dedicated pools of capital are looking for market-rate returns and “some other ancillary benefit. For some, it’s about racial equity; for some, it’s about ensuring they’re building up the next generation [of managers].”

Moore adds that it is important for many LPs to establish an early and long-term relationship with managers “that are going to be the next market leader in their strategy or sector.”

Here are 10 US-based investors that have programs targeting diverse or emerging managers.

Chicago Policemen’s Annuity and Benefit Fund of Chicago

ChiPABF has set a target to entrust emerging or minority investment managers with between 18 and 23 percent of its total assets. This includes an allocation of between 4 and 5 percent to alternatives. These allocations are in accordance with the Illinois Pension Code, which defines minority managers as firms at least 51 percent owned by women, racial minorities or persons with disabilities. Emerging managers are minority managers with managed assets worth between $10 million and $10 billion, according to the code.

ChiPABF’s investment policy also requires the fund to include at least three emerging or minority firms in every preliminary investment manager search, and at least one emerging or minority firm in the shortlist of firms invited to present to the board. ChiPABF has retained NEPC as an investment consultant.


Chicago Teachers’ Pension Fund

The $13.1 billion Chicago Teachers’ Pension Fund has made it a point to invest with minority-, women- and disadvantaged-owned business enterprise (MWDBE) firms since the early 1990s. As of June 30, 2021, it had invested $6.2 billion, or 48 percent of its total assets, with MWDBE firms, up from 46 percent a year earlier, according to its 2021 annual report on diversity and inclusion.

“Our total fund MWDBE assets have increased over 3,000 percent since we first started tracking this data in the early 1990s,” Carlton Lenoir, executive director and interim CIO of CTPF, said in a statement. “These investments pay dividends for our members and yields excellent overall long-term returns and financial stability for our members.”

“The underlying limited partner and their constituent base are themselves diverse, and they want to commit with groups who ultimately do look like them”
Katie Moore
Hamilton Lane

Of the $6.2 billion CTPF has invested, $280 million is in alternative asset classes, making up nearly 14 percent of CTPF’s alternatives allocations. These far exceed the fund’s targets for MWDBE-managed assets, which are 20 percent of the total fund and 10 percent of its alternatives allocations. The fund sources managers through investment consultant Callan.

Recent investments include $40 million to Basis Investment Group Fund II, an African American-owned real estate firm; $30 million to Longpoint Real Estate Fund II, a Latino-owned real estate firm; $15 million to Turning Rock Partners II, a woman-owned private equity firm; and $10 million to Red Arts Capital I, an African American-owned private equity firm.

Contact: Lauren Mathias, senior vice-president,

City of Philadelphia Board of Pensions and Retirement

The City of Philadelphia has a “provision for diversity and local managers” across public and private asset classes. The pension fund has not set a minimum allocation but has capped the provision at 10 percent of the fund’s total assets, which are currently worth $7 billion. Qualifying firms must be majority-owned by women, ethnic minorities or disabled people, or have an established office in Philadelphia, according to the pension’s investment policy.

The City of Philadelphia stipulates that participating firms must also be at least three years old and have at least $100 million in assets under management. Its investment policy also requires all manager searches to include at least one diverse or local firm. The City of Philadelphia retains Marquette Associates as its investment consultant.

Contact: Nat Kellogg, director of manager search at Marquette Associates,

Connecticut Retirement Plans and Trust Funds

CRPTF aims to invest between 5 and 10 percent of its $23 billion portfolio in emerging, diverse and Connecticut-based managers. The program, called the Connecticut Inclusive ­Investment Initiative, includes public and private asset classes. Across its portfolio, CRPFT has target allocations of 9 percent to private equity, 3 percent to real assets and 1 percent to private debt, but the fund does not provide allocation targets broken down by asset class.

CRPTF defines “emerging” as firms that have been in business for up to five years or manage less than $2 billion in assets. It defines “diverse” firms as those that are majority-owned by women or racial minorities.

Contact: Raynald Leveque, deputy chief investment officer,

Los Angeles County Employees Retirement Association

LACERA has allocated up to 7 percent of its private equity bucket and 20 percent of its real estate bucket to emerging managers. The fund has assets worth $72 billion, of which 16 percent is invested in private equity and 7 percent is invested in real estate.

Emerging manager criteria such as track record and AUM “are tailored for each asset class and… the manager universe prevailing,” according to LACERA’s investment policy statement. “Emerging managers may include, but are not limited to, investment managers that are owned by individuals of diverse backgrounds that have traditionally been under-represented in the financial services industry.”

LACERA has retained Hamilton Lane to source emerging managers.

Contact: Katie Moore, head of emerging and diverse investing at Hamilton Lane,

Massachusetts Pension Reserves Investment Management

MassPRIM has allocated $1 billion to emerging-diverse managers across private and public markets over two years to 2023. Last December, MassPRIM handed Hamilton Lane a $300 million mandate to invest in emerging and –diverse private equity firms. It has also contracted Cambridge Associates for real estate.

The pension system “is taking important steps in addressing the inequities endemic in the financial services sector,” Deborah Goldberg, Massachusetts state treasurer and chair of MassPRIM’s board, said last year. “This is real and tangible progress that will reduce barriers and expand opportunities for diverse investment managers.”

Contact: Katie Moore, head of emerging and diverse investing at Hamilton Lane,

Northwestern Mutual

Life insurance company Northwestern Mutual has created a $100 million fund to invest in Black- and minority-owned businesses to “close the racial wealth gap” in the US. The insurer is delivering this via Black-owned private equity funds: it has already invested with the Clear Vision Fund and the Gateway Capital Fund. But Northwestern Mutual has not ruled out direct investments or investing with GPs or funds that are not Black-, African American- or minority-owned, executive vice-president Ray Manista said last year.

Contact: Managers can apply at


Prudential Financial created a $200 million fund in 2021 for early-stage growth funds “with substantial ownership and/or management by women and minorities, particularly those raising capital for first or second funds.” The New York-listed insurance company considers the diversity of the GP’s portfolio management team and the impact of its investment strategy on diverse populations when making investment decisions. It prioritizes GPs raising capital for their first or second funds.

Contact: Cherrise Cederqvist, DE&I portfolio lead and vice-president at PGIM,

State Universities Retirement System of Illinois

SURS has set a target to allocate 35 percent of its total assets (currently worth $23 billion) to women-, racial minority- or disabled-owned firms. SURS is exceeding this target, with 42 percent of its assets managed by such businesses, according to a November 2021 report by the fund.

But SURS is under-allocated to emerging managers (defined as women-, racial minority- or disabled-owned firms with between $10 million and $10 billion in managed assets). Eighteen percent of the fund’s total assets are invested with emerging managers, against a target of 25 percent.

About 16 percent of its alternatives allocation is invested with emerging managers, against a target of 20 percent. SURS is particularly under-allocated among women-owned emerging managers in alternatives, with 1 percent invested against a 9 percent target.

SURS has appointed investment consultants Aksia for private equity, Meketa for private credit and Callan for real assets.

Contact: Investment officers Alex Ramos and Kelly Valle,

State of Michigan Retirement System

SMRS launched a $300 million Michigan Small Emerging Manager Program in 2021 to invest across private equity, venture capital, private credit, real estate and secondaries. Its objective is “to expand access to capital for emerging/small private market investment managers with a focus on generating returns and increasing the diversity of investments and the inclusion of a broader range of managers.”

Eligible managers must have less than $3 billion in assets under management and be raising their first through fourth fund. SMRS has a preference for funds under $1 billion and funds with business operations in Michigan. SMRS has retained Barings and GCM Grosvenor to invest the fund.

Contact: Mina Pacheco Nazemi,, and Stephen Cammock and Todd Roland,