FICTIONAL STORY | How our partnership with the Philadelphia School District created $180M in value while funding STEM programs for 10,000 students
When the Philadelphia School District approached Xponance in 2019, they weren’t just looking for investment returns—they were looking for a partner who understood that every dollar managed represented a student’s future, a teacher’s pension, and a community’s promise.
“We needed more than financial expertise,” recalls Dr. Patricia Chen, then-Chief Financial Officer of the School District of Philadelphia. “We needed a firm that could see beyond the spreadsheets to the real impact these funds would have on our students and educators.”
What began as a conversation about pension fund management evolved into something far more profound: a partnership that would demonstrate how disciplined investing and community impact aren’t competing priorities—they’re inseparable.
The Challenge: Bridging a $180 Million Gap
The Philadelphia School District’s pension obligations had grown substantially, and traditional investment approaches weren’t keeping pace with the district’s needs. With over 17,000 active and retired educators depending on these funds, and a student body of 200,000 children needing resources, the stakes couldn’t have been higher.
“The pressure was immense,” says Michael Torres, Xponance’s Senior Portfolio Manager who led the engagement. “We were managing money that directly affected whether teachers could retire with dignity and whether schools could afford the programs students desperately needed.”
The Xponance team knew that conservative, traditional strategies wouldn’t be sufficient. They needed to construct a portfolio that could generate the returns necessary to close the funding gap while maintaining the risk discipline required for a public pension fund.
The Xponance Approach: Performance with Purpose
Drawing on 25 years of experience identifying high-performing emerging managers, Xponance constructed a diversified portfolio that included a strategic allocation to diverse and women-owned investment firms—managers who often possessed unique market insights but lacked access to institutional capital.
“We applied our core philosophy: talented managers exist everywhere, but opportunity doesn’t,” explains Tina Byles Williams, Xponance’s Founder and CEO. “By expanding the search universe beyond the usual suspects, we found exceptional managers who were generating alpha precisely because they weren’t following the herd.”
The team implemented a three-pronged strategy:
1. Strategic Manager Diversification: Rather than concentrating assets with mega-firms, Xponance allocated to 15 carefully selected emerging and diverse managers across equity, fixed income, and alternative investments.
2. Risk-Controlled Active Management: Using Aapryl’s proprietary analytics platform, the team continuously monitored each manager’s skill versus market exposure, ensuring that the School District was paying for genuine alpha generation, not hidden beta.
3. Community-Aligned Investing: Where appropriate, the portfolio included ESG-oriented strategies and impact investments that aligned with the School District’s values of education, economic opportunity, and community development.
The Results: $180 Million in Value Creation
Over five years, the partnership exceeded expectations. The portfolio generated returns that outperformed the benchmark by 220 basis points annually, creating $180 million in additional value for the pension fund. This outperformance directly translated to:
- Improved Funding Ratio: The pension fund’s funded status improved from 67% to 81%, providing greater security for retired educators.
- Operational Flexibility: Enhanced investment returns freed up $36 million annually that could be redirected to educational programs rather than pension obligations.
- Reduced Risk: Despite higher returns, the portfolio’s volatility decreased by 15% compared to the previous strategy, providing steadier, more predictable outcomes.
But the numbers tell only part of the story.
The Ripple Effect: Investing in Students
With improved pension funding, the School District redirected savings into a comprehensive STEM initiative that has transformed education for over 10,000 students across 45 schools in underserved neighborhoods.
The “Future Innovators Program” launched in 2021, providing:
- State-of-the-art STEM labs in 25 elementary and middle schools
- After-school coding and robotics programs serving 3,000 students annually
- Teacher training and development in STEM pedagogy for 400 educators
- Industry partnerships connecting students with technology mentors
- Scholarship pathways to STEM-focused high schools and colleges
“My daughter is in the robotics program at her middle school because of these resources,” says Marcus Washington, a Philadelphia public school teacher and pension fund beneficiary. “She’s learning coding and engineering principles that weren’t available when I was her age. And I can see my retirement on more solid ground. That’s what real partnership looks like.”
Building Relationships, Not Just Returns
What sets this partnership apart isn’t just the financial outcomes—it’s the relationship built on shared values and mutual commitment.
Xponance team members have visited School District classrooms, spoken at career days, and mentored students interested in finance careers. The firm’s A Good Measure Foundation partnered with the School District to provide financial literacy workshops for high school students, reaching an additional 2,500 students annually.
“Investment management can feel abstract and disconnected from real life,” reflects Sarah Kim, one of the Xponance analysts who regularly volunteers at School District STEM events. “But when you see eighth-graders programming robots, and you know your work helped make that possible, it changes how you think about what we do every day.”
The Diverse Manager Advantage
A critical component of the portfolio’s success was Xponance’s commitment to including diverse and emerging investment managers. Of the 15 managers selected, 60% were minority-owned, women-owned, or emerging firms—organizations that brought fresh perspectives and often overlooked insights to the portfolio.
“These managers weren’t selected because of diversity—they were selected because they were the best managers we could find,” emphasizes Torres. “But our commitment to expanding the search universe meant we found talent others overlooked. That’s alpha generation through genuine skill identification.”
Several of these managers have since grown significantly, with three graduating from “emerging” status to become established institutional managers. The School District partnership helped provide the track record and institutional validation these firms needed to scale their businesses.
Lessons for the Industry
The Philadelphia School District partnership has become a case study in how institutional investing can create compound value—financial returns that enable community impact, which in turn builds stronger, more resilient communities.
“Every pension fund, every endowment, every foundation has a mission beyond investment returns,” notes Dr. Chen. “Xponance showed us that you don’t have to compromise on returns to honor that mission. In fact, when you invest with purpose, you often perform better because you’re thinking more clearly about long-term value creation.”
The partnership has attracted attention from other public sector entities seeking similar outcomes. Xponance has since engaged with three additional school districts and two municipal pension systems, applying lessons learned from the Philadelphia experience.
Looking Forward
As the partnership enters its seventh year, both organizations remain committed to proving that exceptional investment performance and community impact are not just compatible—they’re mutually reinforcing.
The School District’s pension funding has stabilized at healthy levels, providing security for current and future retirees. The STEM programs continue to expand, with preliminary data showing significant improvements in student engagement and performance in science and mathematics.
“This is what ‘Performance with Purpose’ means in practice,” says Byles Williams. “It’s not a marketing slogan—it’s a commitment to recognizing that capital has power beyond returns. How we deploy it, who we partner with, and what values guide our decisions—these things matter. The Philadelphia School District partnership proves it.”
For 10,000 students learning to code, build robots, and imagine futures in science and technology, and for thousands of educators whose retirements are more secure, the partnership between Xponance and the Philadelphia School District represents something profound: proof that finance, at its best, doesn’t just build portfolios—it builds bridges to better futures.
Impact by the Numbers:
- $180M in portfolio value creation over five years
- 10,000+ students served through STEM programs
- 45 schools with enhanced STEM facilities
- 220 basis points of annual outperformance
- 15% reduction in portfolio volatility
- 60% of managers were diverse-owned or emerging firms
- 14 percentage points improvement in pension funding ratio
