4: Graduations Really Do Happen

Introduction

“Manager D” is a minority-owned firm. They manage a variety of equity and fixed income strategies. The manager was initially hired by Progress to manage a small cap strategy for a large public fund. At the time of hire, the manager had $3 billion in assets under management. They were subsequently hired by Progress to manage a large cap strategy for the Progress 21st Century Fund.

The Challenge

The firm’s founder and CEO did an admirable job of leading and building his company and its product line. In particular, they demonstrated an ability to successfully launch new investment products. As a result, the firm grew well beyond the $3 billion in assets at the time of hire. This success catapulted the firm beyond the widely accepted AUM criteria for emerging managers, such that they no longer truly qualified as an emerging firm.

The Solution/Result

Consistent with Progress’ graduation guidelines and recommendations, “Manager D” was graduated from the first fund to a direct assignment with a large Public Fund and more recently was graduated from a Progress Commingled Fund, due to their continued phenomenal growth.

Lessons Learned

“Manager D” continued to grow very rapidly after we initially funded them and they did an exemplary job of managing their internal growth. With this firm Progress learned that some firms can successfully handle growth while others can be adversely affected by it. This firm succeeded because of strong leadership coupled with strong organizational infrastructure. Another lesson learned is that strong organizational capabilities, coupled with a highly viable alpha engine allow a manager to launch other strategies successfully. Progress is a prime example of this; the initial Progress allocation to this manager was not in their core product.