CFA Signs Up 40 Firms to Follow Its Diversity, Equity and Inclusion Code

Since its launch in February, the Chartered Financial Analyst Institute’s Diversity, Equity and Inclusion Code has enlisted 40 companies, representing approximately $17 trillion in assets, along with the CFA itself and the CFA societies in Boston and Montreal.

The DEI Code had its beginnings in March 2020, when the CFA Institute’s Diversity, Equity and Inclusion Steering Committee asked a DEI Code working group to develop a set of principles to increase DEI in the investment industry. The group identified six main principles that would require the support of a company’s leadership:

Pipeline – expanding the diverse talent pipeline;
Talent acquisition – designing, implementing and maintaining inclusive and equitable hiring and onboarding practices;
Promotion and retention – designing, implementing and maintaining inclusive and equitable promotion and retention practices to reduce barriers to career progress;
Leadership – promoting DEI and improving pertinent outcomes in the investment industry;
Influence – company leaders using their positions to promote and increase measurable DEI results in the investment industry; and
Measurement – tracking and reporting on a company’s DEI progress.

According to the CFA, each organization adopting the code must commit to working on the six principles, while .

“Diversity, equity and inclusion are crucial elements in the future of the investment industry and the success of investment firms,” says the CFA. “A diversity of perspectives will lead to better investor outcomes; an inclusive investment industry will better serve our diverse society.”

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The CFA cited a PwC Global survey, which found that 85% of financial services’ CEOs said that promoting inclusion and diversity helps enhance business performance. The institute also cited findings from a McKinsey & Co. study, showing that top-quartile companies for racial and ethnic inclusion outperformed those in the fourth quartile by 36% in profitability.

Companies that sign the CFA’s DEI Code are required to commit to reporting on their DEI metrics and informing the CFA about their progress. Signatories are also expected to provide a confidential annual progress report to the institute, which will report, annually, overall findings on industry progress.

Investment consulting firm Verus Advisory Inc. is the latest company to sign the DEI Code. Other signatories include the California Public Employees’ Retirement System, the California State Teachers’ Retirement System, the Massachusetts Pension Reserves Investment Trust and Northern Trust Asset Management.

“The DEI Code provides an actionable framework for improving DEI outcomes in our industry,” Verus CEO Jeffrey MacLean said in a statement.

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Tags: Aquity, California Public Employees’ Retirement System, California Teachers’ Retirement System, CFA Institute, Chartered Financial Analyst Institute, DE&I, Diversity, Inclusion Code, Massachusetts Pension Reserves Investment Trust, Northern Trust Asset Management, Verus Advisory

Ray Dalio, the billionaire hedge fund impresario and lately a public philosopher, has some advice for investors, both pros and amateurs: Don’t be too optimistic. Sometimes, in a struggling economy, it pays to be a pessimist, wrote the founder and co-CIO of the world’s largest hedge fund firm, Bridgewater Associates, in a LinkedIn post.

He ought to know. Bridgewater’s flagship fund, Pure Alpha II, clocked a 32.2% gain in this year’s first half, according to a source familiar with the firm. A chunk of that return appears to be from the fund’s shorting stocks in Europe, where equities are under pressure due to energy shortages and other fallout from the Russia-Ukraine war.

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In June, the fund reportedly doubled its short positions in European companies, to $10.5 billion. Its targets were said to include French health-care company Sanofi (down 7.5% since June began), German software maker SAP (off 13%) and French oil giant TotalEnergies (negative 17%).

This year, the fund has made money in 65% of the global markets it is invested in, the source said. In addition to shorting, it has logged gains in such areas as commodities, sovereign debt and emerging market currencies.

Bridgewater takes pains to note that Dalio, 72, no longer runs the firm. He has handed off leadership to a younger generation. An investment committee decides where Bridgewater puts its money. Dalio is not on that panel, but serves as what the organization calls its “mentor,” and still is involved in company operations. His investment philosophy remains a touchstone for its strategy.

Pure Alpha, a macro fund that bets on large economic trends, had some tough years in the 2010s, but Bloomberg data show it was ahead 8% in 2021, and then came this year’s blowout.

Hedge funds in general are in the red this year—falling 5.5%, according to Hedge Fund Research—although that’s far less than the stock market fell, with the S&P 500 declining 20.2%.

Over the long pull, Pure Alpha has a fine record. Since its 1991 inception, its total return has risen 11.4% annually, net of fees.

“Always betting on up, which is what almost everybody does, is both a mistake for investors and damaging to the economic system,” Dalio wrote, in the latest of a series of posts giving investment advice.

The easy money of recent years encouraged many overly optimistic businesses to take on large amounts of debt, which must be dealt with now that interest rates are climbing, he indicated.

Due to high inflation, rate boosts are the order of the day for the Federal Reserve, and also for the European Central Bank, as well.