CIO Angela Miller-May’s Diversity Strategy at IMRF

On May 23, Angela Miller-May, chief investment officer of the Illinois Municipal Retirement Fund will receive the Markets Group’s Inaugural DEI Award at the 9th Annual Midwest Institutional Investment Forum in Chicago.


In times of unpredictable economies, chief investment officers and their investment staff tend to stay with managers whom they already know. Predictably, it’s often a time when new firms suffer.

Angela Miller-May, chief investment officer of the Illinois Municipal Retirement Fund (IMRF), has become known, industry wide, for giving emerging and diverse managers opportunities for decades, and seeding and promoting those who perform well. Having recently taken on the CIO role in mid-2021, she has raised the number of diverse managers from 21% to 25.6%. Those in our industry who have been watching the strides she made during her eleven years at the $13 billion Chicago Teachers’ fund, are now taking note on what she is doing at the larger $50 billion IMRF fund, and what plans she has in the making.

“As a good fiduciary, one of your goals is to identify and select managers that are going to outperform and perform well together. And diverse managers have the ability to accomplish this and contribute to meeting this goal.  I view investing with diverse managers as a strategy,” Miller-May said.

The industry seems to be moving toward more private and alternative asset allocations to enhance returns and reduce volatility, she observed.

Currently, when last we spoke, she was examining some 200 different responses to a private credit request for proposals (RFP.) It was the volume of proposals she had been expecting.

“We are working to reach a 4% target allocation in private credit over the next three years. This year, we're targeting an increase from 0.5% to 1.5%, about $600 million that we'll deploy. We're going to hire several managers in different strategies of private credit, whether it's direct lending, opportunistic, special situations, primarily U.S.-based,” Miller-May said.

The RFP launch is widely broadcast by website, LinkedIn, Twitter, Investment publications, at conferences, and through organizations such as NASP (National Association of Security Professionals), NAA (New American Alliance), NAIC (National Association of Investment Companies), etc. Hence, the responses to the request for proposal have been enthusiastic and robust.  

Knowing she would be releasing the RFP about a year ago, she and her 16-member investment team pointedly wove the RFP into their discussions with managers year-round. The team has an open-door policy and meets with on average 300 managers per year, and almost half of them are diverse managers.

“We’re making it the responsibility of the entire team to find diverse managers,” said Miller-May. Managers are vetted team-wide with collaborative conversations on whether emerging managers are ready to take on the needs of IMRF, how they can be incorporated into the portfolio, whether they are ready to be graduated, and what their proper allocations would be.  

“The reality of it is, having a woman and a minority in the CIO seat, also attracts diverse managers, because there is a sense that there may be a more inclusive and less biased environment at play that is open to offering opportunities to diverse managers.,” reflected Miller-May.

The Illinois pension code set a goal of 20% of total assets to be managed by minority and women owned firms.

Miller-May has other ways of leveling the playing field so that diverse managers can flourish, or at least have a fair chance at bat. Listening to feedback from those firms that feel locked out of the bidding room to her fund, she also removes some of the barriers of entry, such as large amounts of assets under management that are often asked for in order to be allowed to bid on a project. Now that she’s at IMRF, she’s able to partner with investment managers in SMA structures like Artemis, Oak Street Seeding, Abbott, Pantheon and Goldman Sachs or Manager of Manager structures like Attucks or Xponance in order to create funds to grow and allocate to smaller diverse managers.

At Chicago Teachers, for example, she led “First Fridays” in which diverse managers could introduce themselves and pitch to investment staff, trustees, and consultants each month. She invited other partners and pension funds into the room to learn and listen as well, and in so doing, became a taproot to enhance the managers’ reach into the industry. She’s planning to have something similar at IMRF and is also quite attentive to creating an allocator pipeline creating new roles for everyone from interns to entry level and senior leaders. She sifts through resumes of potential employees and takes on interns to introduce them to the often-overlooked allocator side of the business. Well-aware that few CIOs look like her, and that Chicago has far fewer women in chief investment officer roles than it used to, she is asking questions such as, “Who are the next CIOs?”

Due diligence on a $10 million investment can sometimes take as much time as a $500 million investment. So, part of her plan is “figuring out how to make our capital accessible, but not making it inefficient for staff to complete rigorous due diligence,” she said. With that in mind, she works closely with firms such as Xponance Minority MOM, and Attucks Minority MOM, and Artemis and Oak Street for real estate, to be a fund of funds that only targets diverse managers, and was also able to graduate some on the alternatives side of the portfolio to handle bigger projects in real estate, (like Brasa and Newport).. She’s currently still looking for more women-owned firms to complete her diversity selection.

Looking at managers with different sized funds gives IMRF the advantage of building diversified relationships. Miller-May is finding that there is less competition in the middle and lower market space, and the hope is that IMRF will benefit from stronger relationship in the future with the firms that it helps to grow. 

Despite being small and mid-size, the managers get the same intense vetting, and IMRF investment team members are asking the same questions they ask of all of their managers: how much money has been raised; who their other LPs are; who's coming into the fund; track record of performance, organization and team dynamics, the economics around it; how they differentiate themselves from other managers so there’s little duplication or redundancy.

“We're looking at the team, the organization, the strategy itself, whether it's sustainable, how it fits in our portfolio, if they’ve executed on the strategy and can continue to do so and performance is always top of mind,” she said. “This not a charity. We're looking for the best managers and the best returns.”


Miller-May's Allocation Shifts 

Miller-May stepped into her new role as IMRF’s CIO in August 2021, during one of the wildest times in economic history. Equity markets were on fire, FTX soon blew up, Russia invaded Ukraine, interest rates and inflation hiked and COVID, geopolitics and trade wars tightened their grip on the markets.

Miller-May reflected, “I thought, this is a really challenging time to transition to a new role. I need to build trust with my board, I need to build trust with my team, I need to hit the ground running on portfolio management and the world is going insane.”

When IMRF’s assets declined by $4 billion in 2022, she pulled back on risk, explained her cautious investment philosophy and steered the fund toward a slow growth path.

IMRF benefited when some of the new diverse managers buttressed the fund and performed well during crucial times when the traditional investment firms were struggling. 

“We see the returns, and we know that diverse managers are contributing by returning similar performance, if not more performance,” she said.

At 98% funded, Miller-May doesn’t have to take many risks. When she first took the CIO seat, the fund had a bias toward large growth strategies. After technology stocks repriced, she rebalanced the fund to remove some of the volatility, then started considering credit options to combat inflation. She invested in asset-backed, globally listed infrastructure to underpin her portfolio and she slightly increased allocations to private equity, reduced domestic equity and increased international equity by about 3%. Since they were performing well, she used bank loans as a proxy for private credit and issued the latest RFP recently. She’s also increased her allocation to fixed income.

“We like the fact that the private credit partnership terms are shorter and not the 10-to-15-year averages of private equity. You can get double digit returns in private credit and get your capital back quicker. We've also invested in things like bank loans and locally listed infrastructure and some real estate that provide income. So, we're looking to invest more with income generating assets. That way, we can continue to make benefit payments to our pensioners and allow the portfolio to continue to participate in growth opportunities,” she said.

The fund’s target allocation to cash is 1%, and that cash is invested overnight with its custodian. An internally managed team manages two large cap equity strategies, one factor-based, one quantitative based, to reduce fees. IMRF doesn’t do much liquidating, it asks managers to send income and dividends back to the fund instead of reinvesting, which has helped create a pool of cash and alleviate stress when the market is down.  

“And that's a lever that we can control, we can readjust it anytime to direct the managers to reinvest or to distribute income to us,” explained Miller-May.

Yet through it all, Miller-May’s strategy toward diversity of culture, gender, and thought, is woven through her portfolio. Each manager has a role to play to keep the portfolio performing to its full potential.

“We seek managers that perform well in up markets, and perform well in down markets, but the reality is, you have to diversify your portfolio to get both. So, it is making sure that you are patient, and you understand why that manager is in the portfolio, and that they're disciplined to the strategy that you hired them for,” she said.


By Christine Giordano