Foundation series

Stanford leads asset manager diversity, Knight Foundation report says

Stanford University ranks among its peers for investment manager diversity, according to a new report on the gender, race and ethnicity diversity of asset managers used by major US university endowments.

Of the endowment funds that participated in a recent Knight Foundation study, Stanford has the highest level of diversity among its managers, with 38% of assets under management based in the United States. Of this number, 11% are managed by female-led partners and 28% are managed by minority-led partners. Comparatively, Duke University has 32%; Princeton has 26.8%; and Harvard has 19%.

“We are fortunate to have partnered with a number of very talented and diverse investment managers who, in turn, have made significant contributions to the performance of the endowment,” said Charles C. Moore, Senior Advisor for Private Equity and Managing Director of Stakeholder Engagement at Stanford Management. Company (SMC). “We are encouraged by the results of the Foundation’s research, but of course we do not believe that our work on diversity is done. »

SMC invests the university’s endowment and other financial assets to provide long-term support for the university. Earlier this year, Stanford’s board of trustees approved an allocation of university reserve funds for a new program of investing in diverse investment managers, the Diverse Manager Initiative, which was not included in the Knight study. . Additionally, SMC has committed endowments to another diversified manager since its information was submitted to the Knight Foundation last winter.

SMC’s own Diversity, Equity and Inclusion Action Plan can be viewed on its website. “SMC is committed to increasing the diversity of its workforce, growing the existing diversity of the endowment portfolio, and contributing to diversity in the asset management industry,” Stanford said in a statement provided in the Knight report. .

As part of an ongoing series of research on diversity in asset management, the Knight Foundation and the Global Economics Group launched a study last fall to assess the extent to which the 25 private colleges and universities and 25 The nation’s wealthiest public hire investment firms owned by women and racial or ethnic minorities to manage their endowment assets.

Sixteen of the 50 colleges and universities decided to participate in the Knight Diversity of Asset Managers Initial Higher Education Study. These 16 schools collectively own 54% of the group’s endowment assets, or $314 billion. Stanford was one of four self-reported schools that participated in the study, which enabled it to assist Foundation research while maintaining confidentiality of the list of SMC managers and details of the endowment portfolio. Peers including Harvard, Dartmouth and the University of Pennsylvania also reported data.

“We encourage colleges, universities, foundations, and corporations to follow the example of the 16 university participants and be more transparent about the management of their assets,” reads the foreword to the Foundation’s report. . “These institutions will play a central role in shaping the global economy of the 21st century and will represent tremendous opportunities for college and university graduates.

The Knight Foundation began publishing research on diversity in the asset management industry in 2017. An earlier Knight Foundation study found that only 1.4% of all US assets were managed by companies belonging to various interests.

We’re pleased to see that every endowment that reported data has a diversity of investment managers well above that mark, which suggests to us that not only is Stanford leading the US endowments on this important issue, but that endowments can usually be ahead of the institutional investor. community as a whole,” Moore said. “As participants in the university’s IDEAL initiative, we are working hard to advance a variety of diversity efforts at SMC and, through the Diverse Manager initiative, to support a new generation of companies. women-led and minority-led investment companies, which we hope will help diversify the asset management industry as a whole.

The Center for Business and Human Rights at New York University’s Stern School of Business was a partner in the study.