Investment firms owned by women and minorities run just 1.1% of the trillions of dollars overseen by the global asset management industry, according to a report issued this week by the James S. and John L. Knight Foundation.
While it’s no surprise that white men dominate the investment industry, the Miami-based Knight Foundation commissioned a study to determine just how much – or how little – women and minorities participate in asset management. The report was authored by Josh Lerner of Harvard Business School and three researchers from Bella Research Group, an advisory firm Lerner runs.
They found that women-owned mutual funds control just 0.9% of assets under management, while minority-owned mutual funds control just 0.3% of assets. Among real estate funds, women-owned companies control just 0.3% of assets and minority-owned firms hold 1.5% of assets.
In the hedge fund industry, firms owned by women and minorities hold less than 1% of all assets, Lerner found. In private equity, the figure is less than 5%.
“Despite the potential economic and social benefits of utilizing diverse asset managers, the industry is afflicted by a lack of diversity,” Lerner wrote in his report.
Among types of institutional investors, private pensions, insurance companies, and foundations and endowments tend not to use women and minority managers. Public pensions, on the other hand, are more likely to use non-white managers, perhaps a reflection that public pensions often strive to invest in a socially responsible manner.
Even as investors use mostly white men as money managers, the decision seems not to be a function of performance, the study said. The study found no significant differences in investment returns for women and minorities compared to white male managers.
The global asset industry totaled $71 trillion of assets under management as of 2015, Lerner said. He lamented the lack of transparency about the racial and gender makeup of investment firms.
“We highlight the need for data sources with comprehensive and detailed reporting of diverse ownership and diverse management,” Lerner wrote. “This demographic information is most notably absent in the PE and real estate spaces. Creating a publicly available, non-proprietary database with this information should be a top priority for the investment community.”
Tags: Diversity, investment industry, John L. Knight Foundation, women