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American Public Plan All-Stars
John Mogg, 37
Senior Portfolio Manager (Strategic Investments),Florida State Board of Administration
"This relationship between the mega-funds and their general partners, it's changing," Mogg says from his Tallahassee office, where he works on the team that oversees non-traditional assets for the $155 billion fund. "For one, some pension funds are actually buying equity stakes in managers—think of the Texas Teachers/Bridgewater deal. We've done that too." But this is only the start of it, the affable deep-sea fishing aficionado asserts. "Strategic partnerships have garnered a lot of attention recently. As we like to think of them, they come in many different forms and mean different things to different organizations. One, you can hand a KKR or a Blackstone $1 billion, and tell them to put it into their various funds in return for favorable economics and additional investment insight," something akin to a cross between investment outsourcing and funds of funds. "Two, and this is what we are evaluating, is working with these types of firms to identify opportunities that don't fit neatly into certain buckets, for example with middle-market lending or special situations. In this case, we form a partnership, where we invest alongside of them." With both parties putting capital up for unique deals—often shorter duration deals that would have previously been scooped up by hedge funds, but which now, perhaps, go untouched—the "alignment of interest, first and foremost, appeals to us." This, perhaps, gives Mogg and his fund more time to act in the way they wish. "We're a slow, methodical fund," he admits—and admires. "We don't tend to be the first mover." With capital—and unique opportunities—like this, they don't have to be.
American Public Plan All-Stars: These five are riding—or perhaps leading is a more accurate word?—the secular wave of public plan investing: a massive alternative investments ramp-up. With more capital to put to work than God, the American public pension system's shift toward more sophisticated asset allocation will alter the asset management business in a way unseen before. Out is long-only active equity. In are hedge funds, private equity, and more. These five, if nothing else, should expect their phones to be ringing non-stop for, oh, the next 15 years.