By Muskan Arora

The attractiveness of higher alpha and returns is driving the $15.2B San Bernardino County Employees’ Retirement Association to approve a new emerging managers program.

At its recent meeting, the pension plan approved a $200M commitment to an investment vehicle named SBCERA Headwaters Fund that will focus on private equity assets.

The $200M allocation would represent nearly 1.3% of SBCERA’s entire portfolio.

The Headwaters Fund would separately be managed by Adams Street Partners and will allocate to between eight to 10 funds over a 10-year period. The ticket size for the investment would range from $20M to $25M. Adam Street will conduct initial screenings on potential partnerships with emerging managers, after approval from the investment staff.

SBCERA considers an emerging manager as general partners that are in their first three iterations of institutional level funds. Long-term partnerships with attractive characteristics, return diversification and better alignment of interests were cited as a few benefits of investing in emerging managers.

As of June 30, the pension plan had allocated 19.3% to private equity against a target of 18%.