2021 Knowledge Brokers

Amy Ridge

As a principal at Mercer Alternatives, Amy Ridge was nominated by a CIO for her work as a senior consultant in the firm’s private markets group and as a co-leader on the development and launch of “Leap,” the firm’s diversity-themed approach.

She applies her 15 years of private equity experience within the private equity group and leads diverse manager research and investing. There, her goal is to help clients close a critical gap in their portfolios by allocating capital to minority- and women-owned private markets funds. She also serves as chair of Mercer’s Diversity, Equity, and Inclusion (DE&I) Investment Committee, and is a member of Mercer’s Private Equity Ratings Review Committee, its Private Debt Ratings Review Committee, and its Sustainable Opportunities Investment Committee.

She works with some of the firm’s largest institutional clients, providing customized pipelines, portfolio plans, and due diligence, and she often presents her recommendations to their boards and investment committees. 

Ridge holds a bachelor’s degree in finance from the University of San Francisco. Prior to joining Pavilion Alternatives Group in 2008 (which was acquired by Mercer in 2018), she spent almost three years at TorreyCove (now Aksia), where she was part of the firm’s private equity consulting group.

CIO: What new qualities do you look for in a manager/service provider given the pandemic’s financial and economic impacts?

Ridge: While most funds have recovered from the valuation losses experienced during the pandemic, a lot can be learned from how they handled the disruption. I now have a few main areas where I spend additional time:

  • I study portfolio company support, both financial and operational. By understanding how managers worked with their portfolio companies during the height of the pandemic, I see how they adapt to risk and protect liquidity. I look at specific examples of operational support because it exemplifies which managers have true operational capabilities. When that expertise is in-house, it provides another line of defense during market downturns. It is helpful to hear the story both from the manager’s point of view, as well as from portfolio company executives.
  • As part of operational due diligence, I put an increased emphasis on cybersecurity. Protection of data is extremely important, especially with so much being shared outside of the office today.
  • I also look at a manager’s return-to-work plan and any associated policy evolution. Team quality and retention are key to a manager’s success, so I make sure that a manager’s plan aligns with the needs and expectations of the team. To form a well-rounded observation, you have to get various points of view; my individual discussions with team members allow me to properly assess if management is aligned with their teams.

CIO: What changes are you making to your asset allocation advice?

Ridge: I specialize in private equity and believe that returns are generated by investing with the best managers rather than timing market cycles. Therefore, I have not changed overall asset allocation recommendations (typically, I recommend the largest allocation to buyout, followed by venture capital [VC]/growth and the smallest allocation to special situations/opportunistic). However, I have been more in favor of including flexible capital funds in portfolios, which are funds that have the ability to invest through both debt and equity. These funds help manage through cycles as they invest in whatever is most attractive in the market at that time (typically buyout-focused in times of economic strength and special situations/debt during market downturns).

CIO: What do you think will be the biggest innovation in your industry in the next 10 years?

Ridge: Diverse managers playing a dominate role in our industry. Unfortunately, that is a bold statement given the long way to go based on the ridiculously low numbers we are at today. However, things are changing and they don’t look to be slowing down. There are new diverse managers entering the market every week, some of which are the future’s top-tier managers. Given that the recent research in this area shows diversity can actually increase the chance of outperformance, it makes it less of a bold statement and more of a logical one. My suggestion is to embrace this growth and ensure that investors are including diverse managers in their searches and pipelines today.

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