Following DAMI Request, House Finance Committee Chair Waters, Sen. Booker Urge GAO to Update Study on DEI Disparities in Asset Management

WASHINGTON, DC – Today, Diverse Asset Managers Initiative (DAMI) executive director Robert Raben applauded the decision by House Financial Services Committee Chair Maxine Waters (D-CA) and U.S. Senator Cory Booker (D-NJ) to update the landmark Government Accountability Office (GAO) 2017 study highlighting the severe lack of progress our nation’s federally managed pension funds have made in working with women or people of color. DAMI asked the leaders to update the study, to see what progress if any the federal pension plans have made with diversity.  The GAO’s 2017 report laid bare the low use of diverse asset management firms by federal entities and the challenges diverse asset managers face when competing for investment management opportunities with institutional investors.

“When the GAO released its report on the state of diversity in the field of asset management, it was one of the first major steps in addressing arguably the least talked about fiduciary crisis in finance, the refusal to work with talented women and people of color” said Raben. “Much has changed in the last five years – both in the realm of finance and diversity and inclusion – which is why Chair Waters and Sen. Booker’s leadership in requesting an up-to-date report is crucial as we approach the start of the 118th Congress.”

A full copy of DAMI’s 2021 letter to Chair Waters is available here.

Since 2014, DAMI has been a leader in the effort to improve diversity amongst asset managers in the financial services industry. DAMI has also worked closely with key stakeholders to build a vibrant, coordinated effort to change the culture of the financial services industry as it relates to asset managers.

In 2017, The GAO authored a report titled, "Investment Management: Key Practices Could Provide More Options for Federal Entities and Opportunities for Minority- and Women-Owned Asset Managers." A new report could determine if any progress has been made, and provide guidance for how to improve moving forward. Separately, a nascent body of researchers, advocates, and policymakers have come up the learning curve on improving diversity in asset management, and the GAO may avail themselves of this learning.

Diversity and inclusion remains one of the biggest issues facing the field of asset management today and the Subcommittee has led essential efforts to address this problem. It is imperative that this important work continue.  

Nationwide, across $82 trillion in U.S. assets, only 1.4 percent is entrusted to asset management firms owned by women and/or people of color. That’s despite the fact that an abundance of research shows that diverse managers improve performance. 

Research 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. 

In 2021, the Knight Foundation released a major study analyzing the diversity of the people managing assets for the nation’s top foundations. Among the 55 foundations that Knight asked to participate, 30 provided data -- an increase in participation from previous years. The study found an overall increase in foundations investing with diverse-owned firms.