How to Succeed as an Emerging Fund Manager, According to the MIT Endowment

MITIMCo has launched a website revealing the service providers and business strategies used by its own emerging managers.

(Adam Glanzman/Bloomberg)

(Adam Glanzman/Bloomberg)

An $18.4 billion endowment is trying to make it easier for emerging stock pickers to land clients by revealing the favorite service providers of successful fund managers.

On Thursday, the Massachusetts Institute of Technology Investment Management Company launched a website designed to help new fund managers get started.

Joel Cohen, a global investor at MITIMCo, tweeted Thursday that the endowment office had created “a website that we just thought ought to exist,” which is “written specifically for emerging manager stock pickers who look to buck convention and focus on generating exceptional results.”

In addition to tweets, relevant quotes, and other pieces of wisdom for investors, the site names some of the law firms, auditors, and fund administrators favored by small managers. MITIMCo compiled the list by surveying emerging managers on Twitter and asking those within its own portfolio.

Fund administrator NAV Consulting was the favorite among surveyed managers, with eight respondents recommending their services. Two surveyed managers recommended SS&C, while three MITIMCo managers said they used their services. Similarly, two survey respondents recommended Theorem Fund Services, which two of MITIMCo’s own portfolio managers use.

Yulish & Associates was another favorite, with three survey respondents recommending their offerings.

Meanwhile, Spicer Jeffries was the top surveyed pick for tax and auditing services, with nine respondent recommendations. KPMG was recommended by six of the surveyed managers and used by four MITIMCo managers.

Foley Hoag and Haynes & Boone were the top recommendations for law firms from the surveyed emerging managers.

MITIMCo also highlighted other resources managers have found helpful in their investment work. Qualitative research platform Tegus, a database of investor interviews with industry experts, was “mentioned many times,” according to the website.

Bloomberg terminal alternative Sentieo and S&P’s Capital IQ platform also got several survey mentions, MITMCo said.

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The emerging manager site also includes a suggested bare-bones budget for a fund launch: $240,000 for compliance, an outsourced chief financial officer, research, travel, and other expenses.

“We know from experience that it is possible to start out as a quirky firm with $5 million of AUM and little in the way of track record and generate exceptional results at increasing scale for a long period of time,” MITMCo said on the website. “These firms often ‘bootstrap’ themselves because they do not have a track record or pedigree to raise much money or are just unorthodox.”

MIT, which returned 8.3 percent during fiscal year 2020, has a track record of investing with emerging managers, its website shows.

The endowment has been “day one” investors with firms managing less than $5 million. It commits ten-year capital to emerging stock pickers and hedge funds, and does not take general partner ownership or economics, it said.