Getting to the root cause of why women- and diverse-owned firms control only 1.4% of the more than $82 trillion managed by the US asset management industry requires examining the manager evaluation process to gauge whether the standards used to judge skill and track record are biased. According to leading impact investor and former Chief Investment Officer of the State of Illinois Rodrigo Garcia, minimum GP commitments, minimum fund sizes, minimum track records, minimum check sizes, minimum team experience, and investment styles that may not perfectly fit into portfolio construction and design are all common hurdles with unequal impacts on diverse managers. Let’s examine strategies to overcome these hurdles.
This article—the fifth article in a series on building diverse and inclusive institutional investment portfolios—draws from a guide for asset owners that Blair Smith and Troy Duffie of Milken Institute and I co-authored with significant input from the Milken Institute’s DEI in Asset Management Executive Council, Institutional Allocators for Diversity Equity and Inclusion and its cousin organizations, including Intentional Endowments Network, Diverse Asset Managers’ Initiative, National Association of Investment Companies (NAIC), AAAIM, Milken Institute, and IDiF. More specifically, it focuses on the third of four pillars on the path to inclusive capitalism: underwrite equitably.
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