Chair Beatty Holds D&I Subcommittee Hearing to Examine Diversity Among Asset Management Companies
WASHINGTON, D.C. – On June 25, 2019, the House Committee on Financial Services Subcommittee on Diversity and Inclusion, chaired by U.S. Congresswoman Joyce Beatty (OH-03), held its third hearing of the 116th Congress entitled, “Diverse Asset Managers: Challenges, Solutions and Opportunities for Inclusion.” The hearing explored the challenges minority-and women-owned (MWO) firms face trying to compete in the asset management industry, as well as discussed legislation to increase the use of diverse asset managers by institutional investors.
“This hearing addresses an often-overlooked problem in the investment sector: the stark, lack of diverse money managers in the vast, $71 trillion-dollar asset management industry,” Beatty said at the hearing. “Unfortunately, wealth is still concentrated in the hands of a few financial entities, and very little opportunity is given to diverse-owned firms who also yield high comparable financial returns. This not only inadvertently excludes a wide swath of firms in general, but disparately compresses the field for MWO firms.” She continued, “This reality only exacerbates the growing wealth gap—and if we are serious about closing that gap, equity cannot remain an insurmountable challenge in the asset management industry.”
Although MWO firms account for approximately 8.6 percent of all asset management firms, recent reports show that they only manage 1.1 percent of all assets under management, or $785 billion out of $71.4 trillion, and are underrepresented as managers in every asset class. In its 2017 report, the Government Accountability Office (GAO) identified 186 MWO firms in the asset management industry, but concluded that use of MWO managers for federal assets remains low. GAO also found that four of the ten federal pension plans they reviewed used no MWO firms to manage their funds. All total, of the pension funds GAO reviewed that were using MWO firms, those MWO firms were managing less than 1 percent of pension fund assets—despite evidence that MWO firms perform as well as (and sometimes outperform) their industry counterparts.
The witnesses for the one-panel hearing included: Juan Martinez, Vice President, Chief Executive Officer and Treasurer, Knight Foundation; John Rogers, Chairman, CEO, and Chief Investment Officer, Ariel Investments; Brenda Chia, Founding Board Member and Co-Chair, Association of Asian American Investment Managers; Angela Miller-May, Chief Investment Officer, Chicago Teachers’ Pension Fund; and Meredith Jones, investment researcher and author.
For more information and/or to view an archived recording of the Diversity and Inclusion Subcommittee’s June 26th hearing, please visit the House Committee on Financial Services’ website.
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