Increase in mandates awarded to diverse owned asset managers

The total number of mandates awarded to diverse-owned firms doubled from 10% in 2018 to 21% in 2021, according to Wilshire Associates’ latest Diverse Asset Managers Initiative.

The report also found that the number of diverse-owned firms in the top four deciles, the minimum rating to be short-listed for a search, has increased from 21 to 34 since 2018.

In addition, the number of highly rated products grew from 32 to 64 between 2018 and 2021 (see graph).

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“With double-digit growth in the opportunity set, we seek to offer clients greater choice among diverse-owned firms while potentially increasing the likelihood of matching mandates to managers,” said the report.

In addition, the research showed that the inclusion rate of diverse-owned firms jumped to 56% of all manager searches, after remaining stable at just under half of all searches from 2018 to 2020.

The number of clients investing with diverse managers grew from 20% to 39% over the same time period.

Joanna Bewick, senior vice president and portfolio manager, said, “Broadening the investment manager opportunity set is not only beneficial in principle, but diversity also maximises the talent pool and increases the likelihood of capitalising on investment opportunities in an increasingly global and diverse world.”

The firm said that one of the greatest challenges in the financial services sector is a lack of data and formalszed congruent reporting standards.

This led the the global advisory firm to focus “on analysing our database of diverse-owned managers and understanding the profile of this population and holdings within our own client base.”

In 2018, it launched an initiative to increase awareness of asset management firms owned by people from under-represented groups among its clients and consultants.

“We believe that diversity in all its forms leads to better business outcomes, and we’re committed to diversity, equity and inclusion both in our workplace and in the asset manager searches we conduct for our clients,” said Jason Schwarz, president at Wilshire.

In 2021 Wilshire expanded the scope of the diversity initiative to incorporate diverse-owned alternatives managers within private markets.

The initiative focuses on diverse-owned, rather than diverse-led firms, because data on the diversity profile of ownership is more readily available than demographics of the employee base.

As a result Wilshire has partnered with the Institutional Investing Diversity Cooperative (IIDC) to promote standardised diversity reporting beyond mere ownership.

“Moreover, ownership determines culture and sets the vision for diversity,” the firm added. “In addition, diverse ownership has very different implications for wealth creation when compared to being a diverse employee.”

©Markets Media Europe 2022

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