Progress defines “emerging manager” as a registered investment advisor that has at least 51% employee ownership and $2 billion or less in assets under management at the time of the initial evaluation. For inclusion in the Progress proprietary database, we use these criteria for all managers, regardless of ownership type. Consistent with our founding focus, we also include all women- and minority-owned investment advisors regardless of size. More recently, we have expanded our focus to include emerging products from some of our more established emerging firms.

Emerging investment firms tend to be companies where investment performance takes precedence over asset-gathering, where niche or innovative investment strategies are designed to capture unrecognized market inefficiencies, and where people are highly motivated to succeed through ownership structures representing financial incentives as well as the psychological incentives of working within an entrepreneurial culture. Emerging firms frequently are still emerging precisely because they emphasize performance over asset-gathering - in fact, the very reasons why these companies offer significant potential often are the same reasons why they have not yet been discovered.

No. Our funding approach is inclusive. We research all investment companies with less than $2 billion in assets under management, and we fund managers, regardless of gender or ethnicity, based on the managers' ability to generate consistent superior investment returns for our clients.

Yes. Progress considers and evaluates all emerging talent around the world, and based on the client mandate, would fund a non-U.S. based manager. The Progress database of emerging managers now includes non-U.S. companies that meet our preliminary selection criteria.

Numerous studies by Progress and others indicate that emerging managers tend to perform better across asset classes — with similar or less risk than larger, established firms. Please contact us if you would like a current bibliography of research on this topic.

Emerging firms offer a competitive edge in three areas: skill, access and execution. Skill takes many forms, with strategies based on primary fundamental research, behavioral finance, quantitative factor models, forensic accounting, economic forecast generation and technical analysis. Access can provide an information advantage to emerging managers through their experience in complex markets such as emerging market equity, emerging market debt and global inflation-linked bonds. Execution advantages include proprietary global data, protective sell strategies and electronic and other private trading networks. Managers gain an execution edge, too, simply by working harder and by being more nimble and less complacent in the day-to-day implementation of the investment process.

Plan sponsors can invest directly in emerging managers, and some do. But others prefer not to — especially during the earliest stages of an emerging firm's life — due to asset size restrictions, time constraints and the need to diversify the business and investment risks associated with investing in early-stage investment companies. Studies prove that “small is beautiful” when it comes to performance, and experience has shown that diversified is beautiful when it comes to harnessing the performance advantage of emerging managers in a risk-controlled manner. Progress provides an expert, one-stop source of emerging manager talent. We offer a diversified, risk-controlled portfolio of emerging managers, and we provide constant oversight based on years of exclusive focus on investing in emerging manager-of-manager portfolios. In fact, many Progress clients do ultimately invest directly when the emerging manager(s) “graduate” from a Progress portfolio relationship to a direct client relationship.

Business risks can be greater than investment risks for emerging managers. While a majority of emerging manager founders and portfolio managers have investment experience, many are running their own business for the first time. That's why our manager selection process includes people and organizational stability as scoring criteria along with the performance track record and the investment process.

Experience has taught us that organizational problems, if not diagnosed early and corrected decisively, can result in weak investment performance. Warning signs are rapid growth without corresponding infrastructure enhancements, sudden changes in key personnel and any unexplained shift in portfolio structure that is inconsistent with the stated investment process.

During the history of the firm, Progress has funded over 100 managers, many of whom have graduated to direct relationships with our clients and, inevitably, some of whom were terminated due to irreparable process or organizational shortfalls. In most cases, the terminated managers demonstrated signs of organizational instability before there was a corresponding decline in the performance numbers. But in some cases, process inconsistencies — when examined closely at the root cause level — proved to be red flags signaling problems affecting the business as a whole.

To protect our clients, we control risk at every step of the investment process, from manager selection to portfolio construction to portfolio rebalancing and manager termination. We have daily access to the managers' portfolios, and portfolios are monitored by our investment analysts, portfolio administration, and compliance for adherence to client guidelines. The administrative team reports to the investment team any deviations from guidelines. Significant or repeated deviations are cause for a manager to be put on the Progress Watch List and could result in termination. In addition to formal oversight measures such as these, our practice of providing assistance to the managers, serving as a partner in establishing and maintaining best industry practices, helps Progress anticipate potential risks.

Yes. Progress believes in doing well by doing good. We can build socially responsible investment programs to fit each client's specific objectives, and we currently manage portfolios to fit client-specified socially responsible guidelines. Our process not only allows for screening out ineligible investments based on a client's criteria, but also can be inclusive in selecting investments that promote the social objectives a client wishes to support — investments in companies that seek to promote a healthy environment, for example.