Our society has long neglected Black and Brown communities, creating disparities and placing people in harm’s way. Each day, I spend time examining the factors precluding the attainment of equality. Whether intentional or unintentional, the financial system has historically discriminated against and marginalized diverse fund managers. Outside of a hope and a prayer, how do we go about fixing the system?
Five years ago, I was hired by Crewcial Partners. I started out as a field generalist but ended up helping to advance a working agenda and new set of priorities around Diversity, Equity, and Inclusion (DE&I), with the goal of creating a robust pipeline of talented diverse asset managers. This opportunity grew to become an inclusive research process which today informs our investment philosophy and $4.2B allocated to diverse asset managers.
Crewcial Partners has a comprehensive research process and these efforts provide access to limited capacity investment opportunities. However, one thing I immediately noticed is Black and Brown asset managers have a tough time raising assets and often have plenty of untapped capacity. Before 2013, we realized our sourcing strategy failed to address our unchecked biases and could be eroding our ability to find other unique or differentiated asset managers to include women and people of color.
In 2017, I joined the research team and immediately hit the ground running to find more talent many investors failed to include in their sourcing efforts. This meant we needed to debias our manager research process, identifying new entry points by casting a wider net to find new networks.
The Community Foundation has several excellent diverse managers in their portfolio. One of the more prominent diverse managers is Brown Capital; the second oldest African American investment management firm in the world. Brown received a Morningstar rating of Gold for its outstanding performance and edge. Equally interesting is many of Brown’s portfolio companies align with the mission and value of our nonprofit clients, as they expect their companies to offer innovative products or services that save time, lives, money, or headaches.
Eddie Brown, Founder of Brown Capital, often speaks about having a front row seat to poverty. He wondered how one could pull themselves up by the bootstraps if they have no boots. Brown’s strategy encompasses boots on the ground efforts that helps to achieve excellence in their research process. Due to their philanthropic work, Brown and his wife have been pulling others up as well. That’s how you make impact in your community and in the world when you scale.
Each day, we aim to democratize capital and work to increase our diverse manager pipeline, capitalizing on the clear financial benefit of an intelligently diversified portfolio.
Among the most important lessons we’ve learned: if you’re not measuring, nothing matters!
- Work to implement manager diversity language in your institution’s Investment Policy Statement and set targets. As investment committees turn over, ensuring long-term sustainability and accountability is key.
- Set definitions of who qualifies as a diverse manager. Discuss with your consultant how you want to allocate capital.
- Request an annual report:
- # of all manager meetings
- # of diverse manager meetings
- # of diverse managers hired
- Exposure or a breakdown of gender, ethnicity, asset class, AUM, and US and non-US managers
- It is important for consultants to provide critical feedback to managers, and that managers are ready to listen, note, and discuss.
As we continue building on our ethos, we remain optimistic about many things. The finance industry has an opportunity to change. For our part, we are not your average investment advisor. We work to align your goals with that of your mission and values—as nonprofits do the important work of supporting their communities, we aim to help you leverage your philanthropic capital to make a significant impact.
For some, change presents conundrums and with growth comes discomfort; however, one must decide what’s meaningful and then prioritize. Supporting exclusionary policies that lock certain groups out to concentrate advantage is unacceptable. Diversity allows us to have tentacles for richer reality about economic dynamism of a new and inclusive world.
Let’s move from a conversation about what are the dilatory effects that get in the way of change and decide to act on the urgency of this moment. Acknowledging bias and addressing who gets a seat at the table is key to building an inclusive economy and ecosystem to drive change.
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Guest post by Angela Matheny, Director of Investment Staff & Diverse Manager Equity at Crewcial Partners
