Various asset management studies are halted by non-participation

How diverse are the wealth management firms managing the endowments of 50 rich U.S. colleges and universities? This is a question that the Knight Foundation has set out to answer – but one that remains unclear, as 34 of the 50 richest organizations are reluctant to talk about it.

The research, which looks at the top 25 public and top 25 private universities, provides an incomplete picture due to the overwhelming participation of institutions. Four colleges self-reported data, leaving only 12 universities that provide researchers with a resource manager roster.

But if one answer can be drawn from limited information: their asset management companies are not at all diverse.

The study, published as an interim report on Thursday due to a lack of comprehensive data, was a joint effort of the Knight Foundation and the New York University Stern Center for Business and Human Rights. It relies on research conducted by the Global Economics Group, a business management consultant.

Institutions providing asset management lists include Princeton, Columbia, Duke, University of Chicago, Vanderbilt, Rice, University of Texas and University of California Systems, Michigan State, University of Illinois, University of Colorado and University of Colorado.

Study unpacked

There are significant differences in diversity among the 16 universities that are partially or fully participating. Stanford University, which, according to self-reported data, has 38 percent of its assets managed under a variety of organizations – the highest reported figures of any organization in the study.

Duke University, which has fully participated in sharing its asset management list with researchers, has 32.1 percent of the assets in the hands of various organizations.

On the opposite end of the spectrum, the various proprietorships manage 6.6 percent of Rutgers University’s assets and 10.3 percent of Michigan State’s assets.

The report contains statements from some colleges that explain their commitment to various organizations. Others chose to explain why they chose not to participate; Their reasons include lack of staff to collect information and inability to share ownership information. Some did not comment.

“Diversity, equity, and inclusion are core values ​​at Stanford University. The Stanford Management Company (SMC), a business unit of the university, is fully involved in Stanford’s diversity initiatives and has its own [diversity, equity and inclusion] Action plan which can be found on its website. SMC is committed to diversifying its workforce, expanding the existing diversity of the endowment portfolio and contributing to diversification in the asset management industry, ”the Stanford Knight Foundation said in a statement included in the report.

Institutions with self-reported diversity statistics include Harvard, Stanford, the University of Pennsylvania, and Dartmouth College.

Duke did not include a statement and did not respond to a request for comment.

“At Michigan State University (MSU) we believe that diversity, equity and inclusion must be upheld at all institutional levels,” read a statement included in the Knight Foundation’s report. “The MSU Investment Office constantly tries to identify different pools of investment funds, but we do not select investment funds on the basis of identity. MSU is bound by the Michigan Constitution, which was amended by Proposition 2 Pass in 2006 and upheld by the U.S. Supreme Court in 2014, which prohibits Michigan public universities from granting, discriminating or protecting preferential treatment to any individual or group on the basis of classification. In the case of government employment, public education or public contracting. Therefore, every academic and administrative unit at MSU must respect these principles; The MSU Investment Office is no exception. While Proposition 2 prevents discrimination and preferential treatment, it does not in any way negate our ongoing and fundamental commitment to DEI. “

Despite the low numbers, Rutgers pointed to the importance of DEI in his statement.

“Rutgers University is committed to creating a more diverse, equitable, and inclusive environment. The university recently unveiled its first diversified strategic plan, which marks specific steps towards charting a more inclusive path as a model of excellence for the institution. Rutgers acknowledges that there are many factors that should be considered, including ownership, when evaluating the diversity of our investment partners. Factors such as individuals in executive leadership formation and investment decision-making roles, for example, are also important factors in evaluation, “the Rotgers report said. And that’s done through retention. We monitor the diversity of our partners at all levels of the organization to understand how they evolve over time. “

Lack of transparency

External observers, as well as those involved in the study, criticized the lack of institutional participation, arguing that providing such information provides valuable investment insights.

“We know that many university leaders are working to identify and incorporate various high-performance proprietary entities to manage endowment funds. But the lack of reliable information on the ownership of investment firms makes it impossible to accurately chart progress or motivate reluctant schools to do more, “Michael Posner, director of the NYU Stern Center for Business and Human Rights, said in a news release.

Some observers were more directed at their criticism.

“While this study shows signs of progress, it also sheds light on how far we have to go. For one, 34 organizations, representing $ 273 billion in assets, have refused to participate. So many schools still refuse to release statistics on their diversity, ”Robert Robben, executive director and founder of the Divers Asset Manager Initiative, said in a press release addressing the interim report.

Raben noted via email that even for colleges that reported the highest percentage of assets managed by various organizations, there are still many unanswered questions. Although organizations such as Stanford and Duke represent strong diversity in the “field-related” region, he noted that “we have no idea what is behind this number. Is it all or mostly white women? Is it LGBTQ? South Asian?” ? We know from other sources that the number of blacks and Latinos / one director is invisibly small, which is the main problem. So, first, universities need to collect data so that we can see exactly what is happening. “

Asked about colleges on the other end of the spectrum where there is a lack of representation – such as the Rutgers – Raben was critical.

“It’s ordinary and terrible,” Raben wrote. “It probably means … that 93.4% of the entire endowment is run by white men. In what sector is talent distributed almost equally among white men only? If you don’t work with all the talent, you are missing the return. ”

While the Knight Foundation has uncovered limited diversity in higher education resource management, the insights from the National Association of Colleges and University Business Officers offer a more positive perspective, noting that many colleges are developing policies to address such concerns.

“Over the past two years, we’ve seen a slight increase in interest among colleges and universities to use different managers,” Ken Reid, NACUBO’s senior director of research and policy analysis, wrote in an email. According to our NACUBO-TIAA Study of Endowments, “From FY2021 to FY2021, companies that have a policy to consider hiring their own investment managers have increased from 5.8% to 7.7% (NTSE) series. The growth was somewhat more noticeable in private colleges and universities, where the share has risen from 6.8% to 10.2% with the policy of considering different companies. “

Long-term trends around diversity are unclear, Red explains, since the survey question has been included in the NACUBO-TIAA Study of Endowment series for the past two years.

Redd considers organizations seeking to diversify asset management to involve their governing boards in this regard and to purchase, update their investment strategies to include diversification goals, and bring in outside consultants who have a strong idea of ​​the landscape and can identify. Different agencies.

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