Boosting Diverse Managers Needs a Big Push, Says Chicago Teachers’ CIO

Key to this, pension official Angela Miller-May tells a US House panel, is requiring a set level of minority and female outside advisers.

Increasing diverse outside asset managers requires a full-bore commitment from the top, Angela Miller-May, chief investment officer of the $10.8 billion Chicago Teachers’ Pension Fund, told a congressional panel.

Miller-May, as part of a hearing in Washington, D.C. on boosting female and minority asset management, cited her fund’s efforts as an example of how to meet this goal.

“It is a part of our fiduciary duty… investing with diverse asset managers that demonstrate outperformance and deliver strong returns,” she said, and it “is more than just important, it is wise.” 

The Illinois pension code has a goal of 20% of the assets managed by female and minority investment advisers, and her fund has surpassed that with 44%, or $4.6 billion, as of March 31.

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In fact, the fund has its diversity policy goals in the whole range of asset classes: equities, fixed income, and alternatives, she said before the House Financial Services Committee’s subcommittee on diversity.

“Having diverse managers in your portfolio brings diverse thoughts, improved decision-making and solutions in a current market environment that is challenged,” said Miller-May, adding that diverse managers perform similar if not better than outside managers that aren’t diverse.

At this stage, minority- and women-owned manager firms account for 8.6% of the total and only run about 1.1% of all assets under management, according to the US Government Accountability Office).

Other problems such as unconscious bias from consultants and investors, as well as perceptions of weaker performance, are impediments, she said. The panel, in a background report, argued that this wasn’t so: A Bella Research Group study shows that women- and minority-owned asset management firms fall into the top quartile of fund performance when compared to peers who manage similar asset classes.

Solving the Problem

Miller-May’s pension plan has a robust outreach program, she said, discussing the issue with state legislators, the fund’s trustees, and her peers at the organization. Chicago Teachers’ also has sought help from several pro-diversity investor organizations, such as the Institutional Limited Partners Association and the National Association of Investors Corporation.

“Investors have the greatest power to affect change in the asset management industry,” she said, adding that more inclusion mandates such as those in the state pension code would really “move the needle and create opportunities for diverse managers on a much larger scale.”

Being a woman of color in finance who made it to the top of her profession, Miller-May also has personal ties to diversity strengthening.

“There is room for all,” she said.

Other panelists included Juan Martinez, vice president, chief executive officer, and treasurer, Knight Foundation; John Rogers, chairman, CEO and CIO, Ariel Investments; Brenda Chia, founding board member and co-chair, Association of Asian American Investment Managers; and Meredith Jones, MJ Alternative Investment Research founder and author of “Women of the Street: Why Female Money Managers Generate Higher Returns (And How You Can Too).”

When asked about solutions for creating greater manager diversity usage, Jones said educating young girls and minorities about the asset management business as well as firms about the topic is a start. Jones sits on the board of Rock the Street, Wall Street, a one-year program that teaches financial education and literacy to high school girls, a number of whom end up considering majoring in finance majors in college and eventual careers in the asset management business. “We’re trying to build the pipeline,” she said.

Jones also said institutional investors should push companies toward transparency reporting on their diversity and inclusion levels as well as implementing diversity mandates for these firms.

Miller-May agreed. “I think the first thing is to set policies to systematically remove barriers and to track and measure your goals and how your moving against those and to improve on that,” she said.

As for consultant bias, Miller-May said there should be checks and balances in place to deal with this problem.

“We’re hiring the consultant and therefore they work for us,” she said, adding that the retirement organization’s staff validates and challenges its consultants on the diversity of their managerial suggestions and also as the manager’s fees. “It’s about holding them accountable as well.”

Miller-May also noted that diverse managers should also reach out to the fund if they want to get noticed. “I tell diverse managers the RFP should not be the first time that I’m meeting you,” said Miller-May. “They need to build relationships way before we get to the point where were searching for managers.

Chicago Teachers’ has another mechanism in place for sourcing diverse managers called “First Fridays,” where managers conduct presentations to the fund every first Friday of the month. That gets them in front of Miller-May and the plan, which will keep the managers in mind when it begins a hunt.

“We are a trustee-led firm and a staff-led firm, not a consultant-led firm,” she said.

The plan is 51% funded.

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Nominate the Most Inspirational Asset Owners and Managers for the 2019 CIO Innovation Awards

Nominations for this year's 10th annual bash close August 3.

Photo by Margarita Corporan


For 10 years, CIO has honored the accomplishments of you, the chief investment officers, with our Industry Innovation Awards

On Thursday, December 12, at the New York Public Library, CIO will once again bring together institutional investors and those who provide for them.

It’s time to nominate deserving asset owners and asset managers/servicers for this year’s awards.

Since we started these awards in 2010, “innovation” has perhaps become an overused buzzword. While others may confuse innovation with change, we do not: Our goal is to highlight the truly innovative approaches to asset management and asset owning, separating the merely different from the meaningful. 

When nominating, ask yourselves, who has done something that is truly different, and that may have changed the way we think about this business?

To nominate, please follow the survey directions here.

What You’ll Need:

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  • To make a nomination, you’ll be asked whether you’re nominating an asset owner or asset manager, the name and title of the person or entity you’re nominating, their location, email address and to choose which category they fall into.
  • The asset owner CIO categories fall into plan size and type, as well as special categories for ESG and Collaboration. Asset manager categories fall into a full array of topics of expertise. You can make more than one nomination, and you’ll do this by indicating if you’re done or ready to nominate another. Please feel free to make as many nominations as you’d like. 


THE DEADLINE TO SUBMIT YOUR NOMINATIONS IS AUGUST 3.

To verify nominees, CIO editorial team will consult an advisory board of former and current chief investment officers, including Chris Ailman, CIO, CalSTRS; Harshal Chaudhari, Head Enterprise Analytics Organization, IBM; Susan Ridlen, CIO and Assistant Treasurer, Eli Lilly; Robert Hunkeler, Vice President, Investments, International Paper; Anne Dinneen, CIO, Hamilton College; Dan Chu  and Michael Brune, Executive Director, Sierra Club Foundation / Executive Director, Sierra Club, Sierra Club; Rosalind Hewsenian, CIO, Helmsley Charitable Trust; Anthony Waskiewicz, CIO, Mercy Health, St. Louis; Sam Masoudi, CIO, Wyoming Retirement System; Jonathan Grabel, CIO, LACERA; Paul Ballard, CEO and CIO, Texas Treasury Safekeeping Trust Co.; Allan Martin, Partner, NEPC; Mansco Perry, Executive Director and CIO, Minnesota State Board of Investment; KIm Lew, Vice President, CIO, Carnegie Corp.; Matt Clark, State Investment Officer, South Dakota Investment Council; Jacque Millard, CIO, Intermountain Healthcare; Raphael Arndt, CIO, Australia’s Future Fund; and CIO’s NextGen of the Year 2018 Chad Myhre, Portfolio Manager of Hedge Funds and Domestic Equities, Public School and Education Employee Retirement System of Missouri.

Hartford HealthCare CIO David Holmgren will chair the board. 

Click here to view CIO’s 2018 Industry Innovation Award winners.

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