How do multifamily offices evaluate smaller fund managers?

Short answer: Pier wants a track record and a reason to choose a manager. Another panelist says small managers can produce strong returns, but job risk keeps them from getting money.

In a discussion on Richard C. Wilson's channel, Pier and other panelists discuss how they assess fund managers.

Pier on why a manager must stand apart

Pier may review a small manager Mercer has not looked at, but wants to know what makes that manager different. Repeated pitches for Chicago multifamily development do not explain why a manager belongs on the firm's platform. (2:23) (at 2:23)

Pier on evidence of execution

Pier doesn't want to go much below $150 million in assets under management and wants a four or five year track record. He says the record does not predict future results, but can show whether a manager has implemented the approach they describe. (3:20) (at 3:20)

Pier on the firm's manager mix

Pier says his firm's expertise is global asset allocation and portfolio construction across other investment managers. He describes the firm as conservative, with about 120 managers across asset classes, most of them established names. (0:59, 1:28, 2:52) (at 0:59)

A panelist on backing smaller firms

The panelist describes two successful investments in small managers, including one who was running $4 million and another with $7 million or $8 million. He also cites a Yale study he describes as finding that small public mutual fund managers beat large managers by an average of 250 basis points a year over 15 years. (3:47 to 5:12) (at 3:47)

"We probably really don't want to fall much below 150 million in aum"