According to Black Enterprise, the “head of a group with 500 black U.S. mayors wants the leaders to change policies on hiring investment firms to manage city pension funds.” The position is led by the president of the African American Mayors Association and New Haven, CT Mayor Toni Harp. The new commitment would introduce language into city pension investment policies that would require “trustees to also consider allocating assets to diverse-owned firms. That includes allotting funds to firms with under $3 billion in assets under management (AUM) or shorter track records.”
The request coincides with recent reports that “have shown that diverse-owned firms have provided returns that are stronger or equal with their non-diverse peers.” With so much positive feedback with working with diverse funds, creating additional opportunities within the pension fund sector makes sense. According to a recent Knight Foundation report, “firms owned by minorities and women manage only 1.1% of the industry’s total $71.4 trillion in assets under management.” This is extremely unacceptable especially when there are plenty of cities led by minority and women that can help change the culture.
But this is the first step. According to Harp, “While we would expect the overall AUM for diverse-owned asset management firms to increase, there is still research that needs to be done to determine a baseline by which to measure the increased use of diverse-owned firms by municipalities, specifically. AAMA is taking the initiative to gather this data at the municipality level through improved investment policy practices to better inform and shed light on this issue.”
Leader of Black Mayors Group Urges Changes in How Cities Select Diverse Asset Managers
