Shelly Tilaye is a senior investment analyst at Los Angeles County Employees’ Retirement Association, where she has held several positions since joining in 1998. Before LACERA, Tilaye was a senior research analyst at Farmers Insurance Group. Tilaye holds an MBA from Cal State Northridge and earned her bachelor’s degree and Master’s in management from the University of Mumbai. She is a Chartered Alternative Investment Analyst (CAIA).
In this interview, Tilaye discusses her 23 years of private equity experience at LACERA, as well as her team's efforts to enhance diversity, equity, and inclusion at LACERA and across the investment industry.
Shelly Tilaye was named on Trusted Insight's 2020 Top Institutional Rising Stars.
Trusted Insight: You've been with the LA County Employees’ Retirement Association for more than 20 years. Tell us about your role there and how your responsibilities have evolved.
Shelly Tilaye: It’s been a grand, always changing, and always interesting 20 years. This is my 23rd year, in fact.
I am part of the private equity team at LACERA. We have grown in size as a team. We used to be just two people, then grew to four. Now we are an eight-person team, and our mandates have also increased. Besides PE primary fund investments, we focus on co-investments and secondary investments in-house.
We distribute our work based on who has the bandwidth. I have conducted diligence and board recommendations on buyouts, venture capital, and distressed investments. We also have some separate accounts in our portfolio. Basically, I cover all types of investments, but currently my focus area is technology buyouts, mostly in the larger technology funds. I’ve looked at funds in Europe, and have done diligence on funds in India, and to a lesser extent in Asia. We have not made an investment there yet, but I have been doing my research and talking to GPs who are fundraising, just to see what makes sense for us at this time. Some of my colleagues have worked on venture capital funds in China.
It's very interesting to watch this whole world nexus coming together, the way everybody's affected by what happens on the other side of the planet, and then actually see that in action—the ways these companies cross boundaries, cross borders, and conduct business with each other. I was looking for international opportunities, and that's why I think we committed to funds which invest both in Europe and in the U.S. or in Asia and the U.S.
Trusted Insight: What made you want to work for a public pension?
Shelly Tilaye: Well, remember: in the late ‘90s, private equity was relatively new. It was very exciting and only known to us as something different than public equities. I had heard a lot about private equity, but I didn’t know much about it.
Then I found this career opportunity at LACERA, probably in the CFA job listings. I was working in the investments department at an insurance company at the time, looking at public equities and the operations side. Private equity was novel and interesting. There was not a lot of knowledge out there about what exactly it was, or how you got involved in it. I thought all this was very cool, so I basically conducted my own diligence on what LACERA does, about what it means to be a public pension fund, and about how they get involved with doing these investments in-house, or with the help of a consultant.
I spoke to a lot of employees at LACERA to decide whether I wanted to join the pension fund. After speaking to a bunch of them, I saw that there were so many facets to public pension funding investing, and I realized how inclusive the culture is at a public pension. A lot of things can be done in that environment, where you receive knowledge about different asset classes, and where you are in a position to understand what’s new and upcoming. There are a lot of information resources available to public pension fund employees to help them really understand what makes the investing world tick.
That is the reason I joined: I thought it was very expansive. It was a great opportunity to learn more about the private equity world and to get to know other people in different investing spheres. Well, little did I know that there are so many complicated things that go on in the background in terms of actuarial studies, asset allocation, and portfolio fit! I found connecting the dots with the larger purpose very inspiring, too.
Trusted Insight: What are some of the qualities that you look for in emerging managers?
Shelly Tilaye: We have an emerging manager program currently managed by JP Morgan. They screen first-time, second-time, and third-time managers for us. Usually, it is under a certain dollar amount—that is what we define as an emerging manager. We decided to go outside of LACERA to manage that program because of limited staff size. We are able to commit a sizable amount of capital that way.
Trusted Insight: Diversity and inclusion have become much more urgent priorities in many organizations this year, both within and beyond the investment world. You are involved in a program called TIDE, which stands for “Toward Inclusion, Diversity, and Equity.” The objective of the program is to incorporate diversity and inclusion evaluations into processes for due diligence of managers. Could you tell us more about how that program works?
Shelly Tilaye: The TIDE project is ongoing; there is a lot more progress to be made. As of now, we are 32 colleagues in the investments department working together on TIDE. We gave a presentation at our board meeting in September, and it led to further discussions. We will be providing additional information to the board going forward. Primarily, we are evaluating what we like to call “5 pillars” of TIDE: Due Diligence, Capital Commitment, Active Ownership, Advocacy, and Internal policies/recruitment.
One of the key areas where we decided to focus was due diligence of investment partners. We will be looking at our external managers and assessing what types of practices they have: Do they have a policy on diversity and inclusion? What kinds of things are they doing in terms of their portfolio companies? We are evaluating proxy voting and engagement in terms of board diversity, assessing how these external managers incorporate diversity and inclusion at their portfolio holdings.
In terms of general advocacy across the industry, we are trying to figure out how we can participate in industry associations, and how to build our own efforts in terms of diversity, equity, and inclusion. Internally, we are also going to be looking at LACERA's policies and recruitment as one of our initiatives.
Trusted Insight: As the name suggests, public pensions serve the public, and have varying degrees of exposure to politicians and citizens. Could you tell us about what your regulatory relationship with county officials is like, and what kind of exposure you have to retirees and members of the public through your public meetings?
Shelly Tilaye: As far as working with county officials goes, I do not have direct contact there. But LACERA's CEO and certain senior legal and administrative personnel have liaisons with the county at different levels. I'm not really involved with that side of the governance because the team is so focused on investing our dollars with different managers outside the Trust that we don't really interact so much with County officials. Members of the public visit our board meetings and provide public comment. Recently, that has been in the format of online meetings.
Trusted Insight: You mentioned that your team has made venture capital investments in China. As I’m sure you’re aware, the Trump administration has singled out public pensions and college endowments, criticizing them for funding competitors to American businesses. Various administration officials have made overtures about actions they might take to make investment in China less attractive to American institutional investors. What kind of conversations have you had with your team about risk versus reward in China?
Shelly Tilaye: LACERA faces different types of risks, political and market-related, in every geography and asset class in which the Trust invests. We invest internationally when we believe the exposure would be additive to the pension fund on a risk-adjusted basis.
Trusted Insight: LA has shaped up to be a venture capital hub. How involved are you and your team with the venture class in general, and what kind of advantages are there to being in a venture hub like LA?
Shelly Tilaye: When we look at venture capital, we look at venture capital across the United States and other countries. Our focus is not one area versus another area; it’s a broad VC focus. We generally look for the best-in-class venture capital firms, wherever they may be, and try to make an assessment as to whether we can get the access we need to such funds. We consider whether the fund meets the risk and return criteria, which we try to weigh whenever we make these investments. If it makes sense, and if our consultant is also on board, then we take it to the board as a recommendation.
Trusted Insight: You've mentioned that you're starting to look into India. With this global outlook that you have, what other geographic regions have been exciting to you and your team as emerging venture markets?
Shelly Tilaye: Not so much in venture, but we've done one or two deals in Latin America. Recently it’s mostly been Europe and Asia. I'm sure there will be funds coming back to the market next year. We'll keep our eyes and ears open. We always like to look at the gamut of funds coming back to the market and then decide which managers have a portfolio fit and attractive risk-adjusted returns.
Trusted Insight: Is there anything else you'd like to share about things that are going on at LACERA?
Shelly Tilaye: Well, the best part of this work-from-home environment is that we all get together on team meetings that did not occur before. Now, the entire team gets on Microsoft Teams. We have an investment-wide meeting every week and smaller group meetings on different topics—for projects like TIDE, for example. We get very focused as smaller groups working together on assignments across asset classes. It's as if there are no boundaries anymore: it's just about ideas, and about how we can take an idea to the next level. It’s best when you interact as a group: you get ideas from different colleagues. So we're trying to find the best ideas and take them forward, take it a notch up, and implement our best ideas successfully.
View our full catalog of interviews here.
In this interview, Tilaye discusses her 23 years of private equity experience at LACERA, as well as her team's efforts to enhance diversity, equity, and inclusion at LACERA and across the investment industry.
Shelly Tilaye was named on Trusted Insight's 2020 Top Institutional Rising Stars.
Trusted Insight: You've been with the LA County Employees’ Retirement Association for more than 20 years. Tell us about your role there and how your responsibilities have evolved.
Shelly Tilaye: It’s been a grand, always changing, and always interesting 20 years. This is my 23rd year, in fact.
I am part of the private equity team at LACERA. We have grown in size as a team. We used to be just two people, then grew to four. Now we are an eight-person team, and our mandates have also increased. Besides PE primary fund investments, we focus on co-investments and secondary investments in-house.
We distribute our work based on who has the bandwidth. I have conducted diligence and board recommendations on buyouts, venture capital, and distressed investments. We also have some separate accounts in our portfolio. Basically, I cover all types of investments, but currently my focus area is technology buyouts, mostly in the larger technology funds. I’ve looked at funds in Europe, and have done diligence on funds in India, and to a lesser extent in Asia. We have not made an investment there yet, but I have been doing my research and talking to GPs who are fundraising, just to see what makes sense for us at this time. Some of my colleagues have worked on venture capital funds in China.
One of my favorite things is analyzing private equity across geographies, and understanding how it interacts with U.S. private equity or U.S. businesses. I visited some places in Europe—Stockholm, Oslo, Amsterdam—to learn a little bit more about the midsize and smaller European funds. I visited London and met with some managers to understand how their funds interact with Asia, on the one side, and also how they follow businesses in the U.S., because there could be merger and acquisition opportunities for those funds across continents."In the late ‘90s, private equity was relatively new. It was very exciting."
It's very interesting to watch this whole world nexus coming together, the way everybody's affected by what happens on the other side of the planet, and then actually see that in action—the ways these companies cross boundaries, cross borders, and conduct business with each other. I was looking for international opportunities, and that's why I think we committed to funds which invest both in Europe and in the U.S. or in Asia and the U.S.
Trusted Insight: What made you want to work for a public pension?
Shelly Tilaye: Well, remember: in the late ‘90s, private equity was relatively new. It was very exciting and only known to us as something different than public equities. I had heard a lot about private equity, but I didn’t know much about it.
Then I found this career opportunity at LACERA, probably in the CFA job listings. I was working in the investments department at an insurance company at the time, looking at public equities and the operations side. Private equity was novel and interesting. There was not a lot of knowledge out there about what exactly it was, or how you got involved in it. I thought all this was very cool, so I basically conducted my own diligence on what LACERA does, about what it means to be a public pension fund, and about how they get involved with doing these investments in-house, or with the help of a consultant.
I spoke to a lot of employees at LACERA to decide whether I wanted to join the pension fund. After speaking to a bunch of them, I saw that there were so many facets to public pension funding investing, and I realized how inclusive the culture is at a public pension. A lot of things can be done in that environment, where you receive knowledge about different asset classes, and where you are in a position to understand what’s new and upcoming. There are a lot of information resources available to public pension fund employees to help them really understand what makes the investing world tick.
That is the reason I joined: I thought it was very expansive. It was a great opportunity to learn more about the private equity world and to get to know other people in different investing spheres. Well, little did I know that there are so many complicated things that go on in the background in terms of actuarial studies, asset allocation, and portfolio fit! I found connecting the dots with the larger purpose very inspiring, too.
Trusted Insight: What are some of the qualities that you look for in emerging managers?
Shelly Tilaye: We have an emerging manager program currently managed by JP Morgan. They screen first-time, second-time, and third-time managers for us. Usually, it is under a certain dollar amount—that is what we define as an emerging manager. We decided to go outside of LACERA to manage that program because of limited staff size. We are able to commit a sizable amount of capital that way.
"We will be looking at our external managers and assessing what types of practices they have: Do they have a policy on diversity and inclusion? What kinds of things are they doing in terms of their portfolio companies?"
Trusted Insight: Diversity and inclusion have become much more urgent priorities in many organizations this year, both within and beyond the investment world. You are involved in a program called TIDE, which stands for “Toward Inclusion, Diversity, and Equity.” The objective of the program is to incorporate diversity and inclusion evaluations into processes for due diligence of managers. Could you tell us more about how that program works?
Shelly Tilaye: The TIDE project is ongoing; there is a lot more progress to be made. As of now, we are 32 colleagues in the investments department working together on TIDE. We gave a presentation at our board meeting in September, and it led to further discussions. We will be providing additional information to the board going forward. Primarily, we are evaluating what we like to call “5 pillars” of TIDE: Due Diligence, Capital Commitment, Active Ownership, Advocacy, and Internal policies/recruitment.
One of the key areas where we decided to focus was due diligence of investment partners. We will be looking at our external managers and assessing what types of practices they have: Do they have a policy on diversity and inclusion? What kinds of things are they doing in terms of their portfolio companies? We are evaluating proxy voting and engagement in terms of board diversity, assessing how these external managers incorporate diversity and inclusion at their portfolio holdings.
In terms of general advocacy across the industry, we are trying to figure out how we can participate in industry associations, and how to build our own efforts in terms of diversity, equity, and inclusion. Internally, we are also going to be looking at LACERA's policies and recruitment as one of our initiatives.
Trusted Insight: As the name suggests, public pensions serve the public, and have varying degrees of exposure to politicians and citizens. Could you tell us about what your regulatory relationship with county officials is like, and what kind of exposure you have to retirees and members of the public through your public meetings?
Shelly Tilaye: As far as working with county officials goes, I do not have direct contact there. But LACERA's CEO and certain senior legal and administrative personnel have liaisons with the county at different levels. I'm not really involved with that side of the governance because the team is so focused on investing our dollars with different managers outside the Trust that we don't really interact so much with County officials. Members of the public visit our board meetings and provide public comment. Recently, that has been in the format of online meetings.
Trusted Insight: You mentioned that your team has made venture capital investments in China. As I’m sure you’re aware, the Trump administration has singled out public pensions and college endowments, criticizing them for funding competitors to American businesses. Various administration officials have made overtures about actions they might take to make investment in China less attractive to American institutional investors. What kind of conversations have you had with your team about risk versus reward in China?
Shelly Tilaye: LACERA faces different types of risks, political and market-related, in every geography and asset class in which the Trust invests. We invest internationally when we believe the exposure would be additive to the pension fund on a risk-adjusted basis.
"When we look at venture capital, we look at venture capital across the United States and other countries. Our focus is not one area versus another area; it’s a broad VC focus."
Trusted Insight: LA has shaped up to be a venture capital hub. How involved are you and your team with the venture class in general, and what kind of advantages are there to being in a venture hub like LA?
Shelly Tilaye: When we look at venture capital, we look at venture capital across the United States and other countries. Our focus is not one area versus another area; it’s a broad VC focus. We generally look for the best-in-class venture capital firms, wherever they may be, and try to make an assessment as to whether we can get the access we need to such funds. We consider whether the fund meets the risk and return criteria, which we try to weigh whenever we make these investments. If it makes sense, and if our consultant is also on board, then we take it to the board as a recommendation.
Trusted Insight: You've mentioned that you're starting to look into India. With this global outlook that you have, what other geographic regions have been exciting to you and your team as emerging venture markets?
Shelly Tilaye: Not so much in venture, but we've done one or two deals in Latin America. Recently it’s mostly been Europe and Asia. I'm sure there will be funds coming back to the market next year. We'll keep our eyes and ears open. We always like to look at the gamut of funds coming back to the market and then decide which managers have a portfolio fit and attractive risk-adjusted returns.
Trusted Insight: Is there anything else you'd like to share about things that are going on at LACERA?
Shelly Tilaye: Well, the best part of this work-from-home environment is that we all get together on team meetings that did not occur before. Now, the entire team gets on Microsoft Teams. We have an investment-wide meeting every week and smaller group meetings on different topics—for projects like TIDE, for example. We get very focused as smaller groups working together on assignments across asset classes. It's as if there are no boundaries anymore: it's just about ideas, and about how we can take an idea to the next level. It’s best when you interact as a group: you get ideas from different colleagues. So we're trying to find the best ideas and take them forward, take it a notch up, and implement our best ideas successfully.
View our full catalog of interviews here.