The New York City Pension Funds have taken steps to formally consider diversity as a criterion in manager evaluation and selection by systematically asking current and prospective money managers about the diversity of their investment professionals, city Comptroller Scott Stringer said May 1.
"Diversity is not merely a social value, it has strong economic value for our investments," Stringer said in a statement. "We want the companies in which we invest to harness the economic and financial benefits of diversity. Now we're going to ask the people who help us choose where to invest our money to show us that they walk the talk when it comes to diversity."
Stringer's office, working with the city's five pension systems, has taken formal steps to begin implementing a survey and response regimen by which firms will relate the composition of their boards and investment professionals. Diversity will now formally be considered as a criterion in determining which managers are most likely to achieve superior risk-adjusted returns for the pension funds, consistent with the trustees' fiduciary duties.
As an industry, asset managers are failing on diversity, said Stringer. According to data calculated by his Bureau of Asset Management based on the U.S. Equal Employment Opportunity Commission 2013 National Aggregate Report, 83% of portfolio managers in the United States are white. A Strategic Consulting Group study found that white men own 97% of hedge funds. According to Bloomberg, across the 10 largest private equity firms, women account for an average of 10.9% of senior managers.
The New York City Pension Funds have $10.9 billion invested with minority and women business enterprises. Last year, Stringer announced a $1 billion commitment to emerging managers, including M/WBE managers, of which $250 million has been committed with significant investments to come.
