Episode #47 Chris Schelling – Assessing the People Behind Private Equity Funds

Christopher (“Chris”) Schelling is the Director responsible for Private Equity investments at Texas Municipal Retirement System (“TMRS”). Prior to joining TRMS, Chris served as Deputy Chief Investment Officer and Director of Absolute & Real Return at Kentucky Retirement Systems and as an Adjunct Professor of Finance at University of Kentucky, where he taught a class in Alternative Investments.

If you are an allocator and want to know more about how some of the best in the business go about vetting their private equity fund managers, this episode is for you! Aside from being a well-known columnist for Institutional Investor, and a guy who makes his passion, deep understanding and curiosity for the profession very evident, Chris takes quite a scientific approach to manager selection. We start our conversation by going through Chris’ career, we move on to discuss the due diligence process at TMRS in more detail, covering topics such as their sourcing funnel, how they sperate the “wheat from the chaff” and their investment their investment approval process. We then get very specific about how Chis and his colleagues at TMRS evaluate one of the 4 P’s of manager selection, the People (the other three being Process, Product and Performance). In fact, Chris wrote a great article for Chief Investment Officer about the topic titled “Psyching out Money Managers”, which you can find here and serves as great background for that discussion. Finally, Chris talks about careers as an allocator and what it takes to succeed in this field.

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By the way – don’t take anything said in this episode as investment advice. It is not! We might just as well have made all of this up. Be smart and speak to an investment professional if you are looking for advice (or maybe speak to these guys). For a full version of the disclaimer, I would recommend you go to the very end of this recording. Luke’s sexy British accent alone will make it all worth it!

Be well and #stayhome!

Leo, Andy & Luke