DAMI SLAMS Racist Letter from Sens. Toomey & Johnson about Diversity & Fed. Retirement Plans

A few weeks ago, Sen. Pat Toomey & Sen. Ron Johnson sent a letter to the Federal Retirement Thrift Investment Board claiming that new calls to boost diversity (along with other so-called "left-leaning" goals) contradict the fiduciary duty the Board has to retirees.

Today, the Diverse Asset Managers Initiative sent a letter to the Senators slamming their racist and sexist beliefs that bolstering diversity will diminish profits. Plenty of studies show that without diversity, asset allocators -- and consequently, retirees -- are missing out on potential returns.

Full Letter Below:

Senator Toomey and Senator Johnson,

I am writing on behalf of the Diverse Asset Managers Initiative, which aims to boost the representation of people of color and women in the asset management industry -- and consequently, ensure asset allocators don’t sacrifice potential profits. I am deeply troubled by your June 30th letter to Mr. David A. Jones, Acting Chairman of the Federal Retirement Thrift Investment Board. 

In the letter, you criticize BlackRock and SSGA’s interest in diversity, among other things, as “left leaning” and contrary to fiduciary duty. You write:

“While these proxy voting guidelines are ostensibly focused on the investor’s fiduciary advantage, both entities are increasingly incorporating left-leaning environmental, social, and corporate governance (“ESG”) priorities into these guidelines.” 

You then go on to attack commitments to addressing “diversity, equity and inclusion” and the “lack of racial and ethnic diversity.”  

We don’t know where you are going with this oversight request, but the troubling implication is that you believe that working with Black, Latinx, Asian or women asset managers is inconsistent with fiduciary duty, and that federal plans should counter BlackRock and SSGA’s commitment to diversity.  

Since that is offensive, and prima facie wrong, we ask that you clear up this confusion. You cannot possibly think that people of color don’t manage money as well as white people, or that women underperform men.  

Indeed, research unequivocally undermines these racist and sexist assumptions -- and shows that women and people of color perform at par, and sometimes better, than white men. The Knight Foundation, for example, released a study in 2019 that found that women and minority-owned mutual funds were overrepresented in the top quartile of performers. Multiple analyses from the National Association of Investment Companies reveal that diverse private equity firms consistently outperform benchmarks. The Kellogg Foundation, too, has found that a new diverse manager portfolio exceeded benchmarks. The list goes on. 

The bottom line is: Diversity enhances returns. And most significant asset allocators now say that publicly. 

As such, why would you possibly use your perch and position to intimidate the federal plans, and the third parties who help manage the plans, from including women and people of color? According to the 2017 GAO study, the plans are all terribly behind in working with women and minority talent, to their detriment. Why would you possibly make their interest in finding the best minority talent harder? And how is it “left-leaning” to recognize that the needless exclusion of women from the management of federal plans is both morally wrong and is costing federal retirees money?

Sens. Toomey and Johnson, the fundamental question is this: Do you believe that women or Black or Latino asset managers cannot perform as well as white men? If you believe that, then consider saying it. If you don’t believe it, why would you intimidate organizations that recognize the talent and want to seek it out, consistent with their fiduciary duty?

Best,

Robert Raben

Executive Director

Diverse Asset Managers Initiative