Introduction
At this year’s SEM Consortium, senior leaders from across GCM Grosvenor’s investment verticals came together for the first time on one stage to explore the evolving world of alternative emerging managers.
Moderated by Denise Stake, Deputy Chief Investment Officer of the State of Connecticut Retirement Plans and Trust Funds, the discussion brought to life the opportunities, challenges, and practical realities of investing with new and next-generation managers — and what it takes to help them succeed.
The Changing Face of the Emerging Manager Landscape
Panelists began by reflecting on how the emerging manager universe has evolved across asset classes.
In private equity, Martin Laguerre noted that the number of new firms has contracted since the Global Financial Crisis as established players have scaled and institutionalized. Yet, he said, the opportunity for partnership remains strong: “LPs are increasingly drawn to managers with a distinct vision — those capable of building something enduring and different.”
Michael Rose described what he called a “Venn diagram” of opportunity spanning infrastructure, energy, and climate-focused strategies, where many participants are, by definition, emerging managers. He pointed to the wave of new entrants pursuing sustainable infrastructure and energy transition investments as an encouraging development for LPs seeking diversification and innovation.
From the real estate perspective, Peter Braffman highlighted the growing creativity in capital formation — from separate accounts and joint ventures to new platform-style structures — that has enabled first-time managers to enter the market more flexibly.
And in absolute return strategies, David Richter observed that the space remains fertile ground for talented newcomers, despite a more competitive landscape. “It’s more difficult now — LPs are smarter, and the world doesn’t need another hedge fund, unless it’s a top-quartile one,” he said. “But for those that are truly differentiated, there’s still a real chance to stand out.”
Why Investors Lean in Early
Panelists agreed that investing early in a manager’s journey can offer both relational and financial advantages. Early partnerships create alignment, access, and capacity — and, as Rose put it, the chance to “back the stars of tomorrow.”
Laguerre noted that emerging managers often deliver diversification benefits and a more engaged partnership dynamic. Richter introduced the idea of structural alpha: “Being early gives us the ability to negotiate better economics, stronger alignment, and meaningful capacity,” he said. “It’s difficult to source high-quality emerging managers, but that’s exactly where our relationships and due diligence add value for clients.”
From Fire Hose to Filter
With thousands of firms seeking capital each year, the panelists discussed how GCM Grosvenor filters the flow of opportunities. “It’s like drinking from a fire hose,” Braffman said. “You have to know what you’re looking for and stay anchored to your investment priorities — but remain open to surprise.”
Laguerre added that co-investing alongside new managers can serve as a valuable proving ground: “It lets us see how a team underwrites and manages risk before making a primary commitment.”
Richter shared that his team screens more than a thousand hedge fund managers annually through a blend of quantitative and qualitative diligence. “Ultimately, we’re looking for an identifiable investment edge, alignment, clear incentives, and the absence of red flags,” he said.
Where Opportunity Lies Today
The discussion also touched on the themes and sectors where GCM Grosvenor sees strong potential:
- Infrastructure: power generation for data centers, renewables, and select transportation assets.
- Private Equity: healthcare modernization and financial services innovation.
- Real Estate: niche subsectors within residential and industrial assets that demonstrate resilience amid market shifts.
- Absolute Return Strategies: low-correlation strategies that complement broader portfolios.
Supporting the Next Generation
Beyond capital, panelists agreed that what emerging managers often need most is partnership, feedback, and operational guidance. “The best relationships are with managers who want someone to bounce ideas off — not just on deals, but on how to evolve the business,” said Rose.
Laguerre described GCM Grosvenor’s approach as “blocking and tackling” — helping firms strengthen operations, scale responsibly, and attract talent. Richter added that his team often helps managers refine their processes, transparency and materials, and operational controls. Braffman emphasized the importance of steady engagement through changing market cycles: “It’s critical to be supportive as they navigate volatile times in the market,” he said.
Recognizing Tomorrow’s Leaders Today
The panel closed with a reminder that resonates across asset classes: every great firm started somewhere.
“Every great manager was once an emerging manager,” Braffman said. “The challenge — and the opportunity — for investors is to recognize that potential early and help them grow.”
