The Trusted Source for Emerging Managers August …...managers seeking to do business with them....

While much of the focus since March has centered on how U.S. markets are han-dling COVID-19 and how federal and state leaders are addressing public health, the virus is a global pandemic that has left global equity and non-U.S. equity man-agers navigating uncharted territory.

And while equity markets across the globe rallied in the second quarter, un-derstanding what lies ahead continues to be a quandary for allocators.

The MSCI ACWI Index returned 19.2% in the second quarter, with the ACWI ex-U.S. Index returning 16.1% and the MSCI Emerging Markets Index post-ing an 18.1% return.

While those figures trailed the 20.5%

return seen in the Standard & Poor’s 500 Index, the potential for future gains reso-nates in international markets, according to data from investment consultant Mar-quette Associates.

The firm looked at the average draw-downs of bear markets peak to trough in the EAFE and emerging markets sectors and found that the EAFE markets average a one-year post bear market return of 40.7% and a two-year post bear market return of 66.3%, while emerging markets offer even more attractive average re-turns of 77.4% and 92.8%, respectively.

Despite the historical potential, the

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Vol. XV, Issue 8

The Trusted Source for Emerging Managers August 2020

At least four prominent universities have provided responses to an inquiry from two congressmen about the diversity of their en-dowments.

Reps. Emanuel Cleaver D-Mo. and Joe Kennedy III D-Mass. sent letters to 25 uni-versities last month to express their con-cerns about the lack of diversity among asset managers of university endowments and in-quire about the institutions’ practices in pro-viding equal opportunity to diverse-owned managers seeking to do business with them.

Harvard Management Company (HMC), the investment arm handling Harvard Uni-versity’s approximately $41 billion endow-ment, had 27% of its total active manager re-lationships with “majority diverse” external

managers, which represents approximately 26% of its assets managed by active exter-nal managers, according to a response let-ter from CEO Narv Narvekar and Managing Director for Sustainable Investing and Chief Compliance Officer Kate Murtagh.

Among HMC’s U.S.-based managers, 19% of active manager relationships are “ma-jority diverse,” which represents approxi-mately 18% of capital with active external managers, according to the letter, which de-fines majority diverse as firms owned (50% or more) either by women or by racial and eth-nic minorities, including African American/Black, Latinx, Asian, and Native American/

See INT’L, Page 11

School Is In Session:Universities Begin Releasing Endowment Diversity Data

Public Markets Rebound In Second QuarterThe public markets had a strong rebound in the second quarter after a staggering drop at the end of the first quarter, helping ease concerns among managers and institutions, according to the latest EMM quarterly per-formance rankings.

Domestic small-cap growth equity manager Granahan Investment Manage-ment had the strongest second quarter, with its Small Cap Select Opportunities strategy posting a 63.80% return. For the first half of the year, Barton Investment Management’s mid-cap growth strategy returned 53.99% to top the list.

For the one-year period, emerging markets small-cap equity manager Cara-van Capital Management remained the top manager for the second straight quarter with a 73.98% return.

Overall, 1,123 products from 385 firms were included in the report, with large-cap core remaining the most popular strategy with 99 products.

Managers were required to enter firm asset and product asset data for the period ending June 30 as well as performance fig-ures for the quarter to be included.

Firms included in the report have less than $2 billion in overall assets under man-agement and portfolios with greater than $10 million under management.

The report also includes all women- or minority-owned firms with assets up to $20 billion while maintaining the minimum product requirements. All products are screened gross of fees.

Please see the full disclaimer in the full report for details on how the data was col-lected from the Informa PSN database.

See SCHOOL, Page 5

COVID-19 Brings Questions, Opportunities To Global Markets

See REPORT, Page 1a

http://emergingmanagermonthly.comhttps://cleaver.house.gov/sites/cleaver.house.gov/files/Endowment%20Diversity%20Letter.pdfhttps://www.harvard.edu/sites/default/files/content/HMC%20and%20diverse%20asset%20managers.pdfhttps://www.harvard.edu/sites/default/files/content/HMC%20and%20diverse%20asset%20managers.pdfhttp://

Real Estate Firm Finds Warm Reception Among Institutions

◄ p. 23

Small-Cap Shop Seeks Growth In Value Strategy

◄ p. 22

Segal Marco Discusses Diversity Efforts

◄ p. 9

Georgetown Releases Diversity Report

◄ p. 7

Cambridge Sees Opportunity For Racial Equity Investing ► p. 13

Allocators Discuss Virtual Due Diligence ► p.17

Granahan Continues Growth ► p. 21

Connecticut Increasing Emerging Mgr. Program ► p. 25

Texas Plan Hires CEO ► p. 28

NSIDE

SSUE THISI

Emerging Manager Monthly, August 2020 3

When you combine a global pandemic that restricts travel and a social awakening on the issue of race that refuses to lose steam, you end up with an August issue jam-packed with news.

It was a month filled with SEC hearings, deadlines for con-gressional requests for endowment data, countless webinars and more—all with the aim to continue to promote diverse and emerging managers within the institutional marketplace.

The strength of the SEC’s Asset Management Advisory Com-mittee panel laid a solid case for the need for more data to be required by the federal agency.

Coupled with the early responses to the request from two congressmen for diverse manager data from the country’s top endowments that shed light on diversity and inclusion at some of the largest nonprofits in the world and July was a month of con-tinued progress to the ramped up dialogue that began in May.

Consultants such as Meketa Investment Group, Cambridge Associates and Segal Marco Advisors furthered the discussions on how they are improving their efforts for diversity.

However, as I noted last month, I’m also going to be starting to question consultants that publicly tout their efforts without giving any real insights into what those efforts are or what their starting point is.

Over the past two months I have reached out repeatedly to Angeles Investment Advisors and Russell Investments looking to have discussions with leadership on their investments with and research on diverse and emerging managers following public statements both firms made in the aftermath of George Floyd’s death. Unfortunately that outreach has either been completely ignored in the case of Russell or not progressed beyond an initial exchange in the case of Angeles.

Firms do not need to talk to the media to be sincere in their efforts, however as I’ve championed, transparency and openness, especially in today’s climate, are critical components of support-ing a push for more equality in the asset management industry. Hopefully those firms will see this and be willing to talk. Or per-haps one of our loyal readers with a relationship with either firm can convince them this is a conversation they need to have. Now is not the time for silence.

Matthew McCueEditorFinancial Investment News

15 West 26th Street, 4th FloorNew York, NY 10010

www.emergingmanagermonthly.com

EDITORIAL

MANAGING EDITOR | MATTHEW [email protected] | 646-810-1075

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REPORTER | LINDSAY [email protected] | 646-738-7945

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ASSOCIATE REPORTER | LAUREN [email protected] | 646-810-1074

ASSOCIATE REPORTER | TEDDY [email protected] | 646-738-7948

RESEARCH

DIRECTOR OF RESEARCH | GAR [email protected] | 646-810-1073

SENIOR RESEARCH ANALYST | PAMELA COX

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From The Editor

http://www.emergingmanagermonthly.commailto:[email protected]

The Securities and Exchange Com-mission should put a greater impe-tus on requiring firms in the asset management industry to disclose diversity information, according to panelists at an Asset Management Advisory Committee webcast held Julty 16.

“The SEC is well within its au-thority to measure both the quan-titative and qualitative impact of increased participation of minority investment managers. This effort starts with today as a baseline. The SEC…already has the means to collect the data in its annual diver-sity assessment report sent to fund managers,” said Brenda Chia, co-chair of the Association of Asian American Investment Managers during the Improving Diversity and Inclusion in the Asset Manage-ment Industry panel, which was moderated by committee member Gilbert Garcia.

The panel highlighted the ongoing issues surrounding diver-sity and inclusion—and the lack thereof—in the asset management industry. Juan Martinez, v.p., cfo and treasurer of the John S. and James L. Knight Foundation, which has led multiple research ef-forts into the use of diverse asset managers in the investment space as well as the foundation arena more specifically, said the data is important to providing the context of why this issue needs to be addressed.

“We should care because there is an opportunity…for investors to outperform the market and as we think about stabilizing com-munities and we think about institutions that can use those results, as we think about our own pension funds, for example, we should be incenting out performance,” he said.

He added that one of the trademarks of the SEC is the ability to provide transparent, high-quality data.

“And what we’ve seen in this regard is data on the diversity within the investment field, the asset management space, is incred-ibly hard to come by, so the presupposition that market forces will be able to drive assets to the best performers could be undermined by this lack of data. So one of the things that we would ask is for greater participation, greater sharing of data,” he said.

Robert Raben, executive director of the Diverse Asset Manag-ers Initiative, discussed the need to force the question when no one wants to discuss diversity, highlighting that when looking at the SEC’s own survey of regulated entities on diversity, only 69 of 1,367 entities bothered to answer the survey.

“I raise that not to say anything negative about the SEC, but how intractable the central problem is here. Most white people don’t want to have this conversation,” he said. “The importance of the SEC at the top level raising it cannot be overstated.”

He later in his remarks discussed the importance of data to furthering the discussions.

“Until we have a body of data that shows what is going on, you

can’t have a community of practice among academics, sociologists, statisticians, etc., sort of staring at this showing people best prac-tices and how to improve, you are stuck with people like me relying on anecdote, which is a terrible way to make change,” Raben said, calling tracking and reporting “crucial” to progress.

“I’d encourage you to stop treating it as sort of, ‘oh it would be nice.’ In a field allegedly driven by data, the refusal to provide information to anybody, including the agency of record, about in-stitutions’ own diversity is deeply, deeply troubling and sort of the passivity of the institution about it occurring year after year after year is a sign that we are not there yet. It is simply unacceptable for a regulated entity, for a Mercer, to not provide data, which they are giving to the (Equal Employment Opportunity Commission), about its own demographics in 2020,” he said.

Solange Brooks, ceo of the New America Alliance, said the SEC should begin asking diversity questions during audits, which will send a “subtle, yet powerful, message” to advisors and “sends a tre-mendous signal that the SEC is cognizant of the value add that di-verse teams bring to business.”

She added that the SEC should develop a diversity scorecard with four or five data points that should be required for all regis-tered investment advisors to report on a consistent basis. “This way we add transparency to diversity and inclusion by businesses,” she said.

Ronald Parker, president and ceo of the National Association of Securities Professionals, also advocated for reporting during his remarks.

He said the SEC should mandate and enforce all agencies to re-quire all investment managers, advisors and other financial service providers to file diversity reports “so that we can actually glean as to what are some of the best practices and in the private sector be willing to share some of those best practices with other organiza-tions who may be lagging in their efforts.”

Robert Greene, president and ceo of the National Association of Investment Companies, said that there must be intentionality around diversity and overcoming the status quo.

“There is [no recommendation] greater than asking the SEC to be what it is supposed to be, the watchdog over the best practices and the guardian against the worst practices in financial services. And one of the worst financial services practices is the exclusion of women and people of color that are extraordinarily talented,” Greene said.

Greene said data and reporting should be required from insti-tutional investors “because if they are not asking for diversity it will not happen” and also from investment consultants.

“The consultants in particular act and operate with a level of impunity and a level of disregard for inclusivity that is embarrassing in 2020 and it would have been embarrassing in 1975,” Greene said.

Garcia, in wrapping up the conversation, reflected on the op-portunity in front of the SEC committee.

“We need to seize this moment,” Garcia said. “We are at the right place at the right time in history where the world is really watching us. Let’s make it happen.”


SEC Must Put Impetus On Requiring Diversity Data: Panel

News Features Columns Marketing Alternatives Searches Industry

Gilbert Garcia


Pacific Islander.HMC, which has 50% of its senior investment and

management team self-identify as women or ethnic and racial minorities, currently relies on its own famil-iarity with its managers to assess demography and has not surveyed its managers for self-identified demo-graphic information.

“Recent activism has emphasized the necessity of rapid individual and collective action to achieve last-ing social change. While no one economic actor can repair centuries of systemic racial, ethnic, and gender discrimination, each of us must do our part to expand opportunities for women- and minority-owned firms and encourage our peer institutions to do the same,” the letter from Narvekar and Murtagh states.

The approximately $49 billion University of Tex-as/Texas A&M Investment Management Company (UTIMCO) had approximately 13% of its endowment assets invested with U.S.-based diverse-owned active management and approximately 9% of the total en-dowment assets invested in the U.S. and globally are allocated to diverse-owned firms, according to a re-sponse letter from University of Texas System Chan-cellor James Milliken.

Some of UTIMCO’s larger relationships in terms of invested and committed capital are with minori-ty-owned firms, including private infrastructure man-ager Grain Management, private equity manager Vista Equity Partners and emerging markets equity manager Westwood Global Investments, according to the letter, which notes that the institution has five minority- or women-owned external brokers that it works with for internal trading.

Ohio State University’s approximately $5 billion long-term investment pool had greater than 0% and less than 5% of assets under management with di-verse-owned firms while its intermediate-term in-vestment pool, which serves as an operating funds portfolio, had greater than 10% and less than 20% with diverse-owned firms, according to a response letter from Senior V.P. and CFO Michael Papadakis.

Ohio State’s percentages exclude investment managers with large partnerships that have some diverse owners, but less than 50%, and managers that fit the above definition of a minority, but are not U.S. based, such as an Asian manager based in China, the letter states.

The response letter also notes that the long-term investment pool has significant passive investment holdings such as the Standard & Poor’s 500 Index and U.S. Treasuries that are not managed by di-verse-owned firms, but included in the asset base, which reduces the overall diverse-owned percentages.

The University of California provided its first annual diver-sity report in response to the congressmen’s inquiry.

The Oakland, Calif.-based university’s 2019 baseline study sur-veyed 106 of its investment partners and found that it works with 22 substantially diverse firms, meaning firms that are between 25% and 50% diverse-owned, and 13 majority diverse firms, meaning firms that have more than 50% diverse ownership, according to the report (EMM, 3/4).

The institution works with 63 non-diverse-owned investment partners and eight firms did not respond to the survey.

When answering the congressmen about how they communi-cate priorities and expectations about inclusive asset management practices to investment staff and/or consultants, Harvard noted that

SCHOOL: Harvard, UTIMCO, Ohio State Among Universities To Disclose Continued From Page 1

Continued On Next Page

University % Notes

19%

13%

0%

12%

19% of active U.S.-based managerrelationships are “majority diverse"firms owned (50% or more) either by

women or by racial and ethnicminorities, including African

American/Black, Latinx, Asian,and Native American/Pacific

Islander.

Approximately 13% of itsendowment assets invested withU.S.-based diverse-owned active

managers.

Long term investment pool hasgreater than 0% and less than 5% of

assets under management withdiverse-owned managers.

12% are majority diverse firms,meaning firms that have more than

50% diverse ownership.


https://www.fin-news.com/wp-content/uploads/2020/02/12-13-19-University-of-California-Office-of-the-CIO-Diversity-Report.pdf

Narvekar and CIO Rick Slocum “regularly discuss HMC’s priorities about inclusive asset management practices with the investment team,” according to the letter.

HMC has also engaged a third-party service provider to intro-duce the organization to more women- and minority-owned asset managers with a particular emphasis on people of color historical-ly under-represented in the investment sector, defined as African American/Black, Latinx and Native American/Pacific Islander, the letter states. HMC’s initial engagement with the service provider is for one year with the expectation of monthly introductions to diverse managers. An undisclosed managing director on the investment team has been assigned to supervise the review of and follow up with man-agers identified in the process.

UTIMCO’s senior leadership “has consistently communicated our philosophy to our internal investment team that a diverse team and a diverse set of external managers can improve our decisions making, which we expect to enhance our risk adjusted returns,” ac-cording to the letter.

As part of UTIMCO’s initial and ongoing due diligence process, it

asks external managers to fill out a diversity and inclusion question-naire that covers both the composition of the firm’s investment team and ownership of the firm, according to the letter.

Ohio State requires all supervisors in its business and finance unit to complete diversity and inclusion training and a version of the training is being introduced for all business and finance employees, according to the letter, which notes that additional training modules on the topic are available on a voluntary basis.

The letter noted that following the hiring of CIO Vishnu Srini-vasan, the institution is evaluating its diversity and inclusion policies and the office of investments is evaluating its selection process for external asset managers.

In looking at senior institutional leaderships plans to increase opportunities for women- and minority-owned asset management firms, HMC has worked with a number of groups to address endow-ment asset management, sustainable investing and diversity inclu-sion, including working with Michael Posner’s NYU Stern Center for Business and Human Rights, in partnership with Robert F. Kennedy Human Rights, the Managed Funds Association, the Diverse Asset Managers Initiative (DAMI), National Association of Investment Com-panies and the Diversity and Inclusion Advisory Council of the Insti-tutional Limited Partners Association, according to the letter.

Part of HMC’s collaboration with DAMI included a day of meet-ings with diverse managers in February 2020 that offered an opportu-nity to meet with ten investment teams selected from member firms of NAIC, according to the letter, which notes that HMC plans to con-tinue its collaboration with DAMI to conduct similar events with NAIC and other affinity groups in the future.

UTIMCO detailed that its investment policy statements prohibit using any funds to “achieve temporal benefits for any purpose includ-ing use of its economic power to advance social or political purposes.” As a result, it seeks out a diverse set of qualified external managers with a goal of improved decision making and enhanced risk-adjusted returns, but it does not make any investment decision based on the race, color, ethnicity, sex or gender of the owners or principals of a firm.

The letter notes that President, CEO and CIO Thomas ‘Britt’ Har-ris has a long history promoting investments in minority- and wom-en-owned firms, including creating one of the first emerging manager funds in the U.S. and creating the second largest emerging manager program in the U.S. while at the Teacher Retirement System of Texas.

Ohio State’s investment office is comprised of more than 50% women and minorities with diverse represen-tation at all positions and levels and has a target that 10% or more of its intermediate-term investment pool assets be managed by women- and minority-owned firms, according to the letter, which notes that the target has been met or exceeded, as high as 20%, since inception.

“As it relates specifically to OSU’s investment pools (Short Term, Intermediate Term and Long Term) the leadership team has made progress in increasing opportunities for women and minority-owned firms, but acknowledges that there is still more work to do,” the letter states.

The letter was also sent to Yale University, Stanford University, Princeton University, Massachusetts Institute of Technology, Univer-sity of Notre Dame, Duke University, University of Chicago, Washing-ton University in St. Louis, Emory University, University of Virginia, Rice University, Vanderbilt University and Dartmouth College, which did not respond to requests for comment.

Universities that also received the letter but were unable to pro-vide further comment or information by press time included the Uni-versity of Pennsylvania, Texas A&M University, University of Michigan, Northwestern University, Columbia University, Cornell University, Johns Hopkins University and University of Southern California.

The correspondence follows a letter from the National Action Network (NAN) to Harvard, Yale, Princeton, University of Michigan and Cornell asking for the institutions to report on the diversity of their collective $117 billion in endowment assets as it looks to tack-le the issue of utilization of diverse-owned asset management firms (EMM, 5/6).


The leadership team has made progress in increasing opportunities for women and minority-owned firms, but acknowledges that there is still more work to do.

SCHOOL: More Endowments Expected To Release Diversity DataContinued From Previous Page


Georgetown University released its initial report exploring the diversity of the external manag-ers associated with its approx-imately $1.8 billion endowment last month, as first reported by EMM sister publication Nonprofit News.

The Washington, D.C.-based university’s Report on Diversity of External Investment Manag-ers found that 14% of the uni-versity’s managers had 50% or more minority ownership, while one-quarter had 25% or more minority ownership and 30% had at least one minority as part of its ownership structure.

In looking at the female ownership of the university’s invest-ment managers, 7% of the firms had 50% or more female owner-ship, while 11% had 25% or more female ownership and 23% had at least one female as part of its ownership structure, according to the report. The percentages of minority and women owner-ship amongst its managers remained relatively static between 2019 and 2020.

“We wanted to look inward at our own practices and under-stand the diversity among our managers. Through that work we confirmed what we had suspected, which was a limited amount of diversity particularly among minorities, but also among wom-en,” CIO Michael Barry said. “As a result of this initial work, it has created a greater sense of urgency on our team to engage with our managers about their hiring practices and broaden our field of vision for managers that are either owned by women and minorities and/or have a higher representation on their staff, especially among the investment staff ranks.”

When looking at diversity by ethnicity across all employ-ees of its managers, the university found that 70% of the overall staffs were white, 16% were Asian, 6% were Hispanic, 5% were Black and 3% identified as other, according to the report. The di-versity of the institution’s investment managers’ overall staff has improved year over year, rising to 30% in 2020 from 27% in 2019.

When broken down by investment staff versus other staff, investment teams across managers were comprised of 70% white staff members, 20% Asian, 5% Hispanic, 3% Black and 3% other, while the firms’ other staff members included 69% white employees, 14% Asian, 7% Hispanic, 6% Black and 4% other, ac-cording to the report.

“We believe increased diversity in the investment manage-ment industry, and all industries, is a positive and long overdue evolution for our society,” the report states. “We acknowledge that we have the opportunity to partner with more diverse firms. We continue to engage with investment managers to encourage diversity and inclusion in their recruiting and hiring practices.”

The university also examined the diversity by gender across all employees of its managers.

The managers’ entire staff were comprised of 65% males and 35% females. The firms’ investment staffs were comprised of 80% males and 20% females, while other staff at the firms was represented by 49% males and 51% females, according to the report.

“We thought this would help amplify the conversation at other institutions and perhaps if other allocators start to collect and even publish their data that the industry more broadly would recognize this issue and that might change the hiring practices of investment firms,” Barry said.

The report includes information from 42 U.S.-based manag-ers across all asset classes surveyed last year as well as 47 polled in the first quarter of 2020, according to Barry.


Georgetown Releases Initial Report On Manager Diversity

Michael Barry

Delivering invaluable intelligence on foundations and endowments, including manager search leads, breaking news, people moves and profiles.

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https://investments.georgetown.edu/socially-responsible-investing/diversity-report/https://investments.georgetown.edu/socially-responsible-investing/diversity-report/https://investments.georgetown.edu/socially-responsible-investing/diversity-report/http://www.fin-news.com


NEWS BRIEFS

► The Beeck Center for Social Impact + Innovation at Georgetown University has held two webinars focusing on racism in asset man-agement.

The series, Hiding In Plain Sight, was organized by Beeck Cen-ter Fellow Erika Seth Davies.

The first webinar, Addressing Racism In the Asset Management Industry, was held on July 9 and the most recent webinar, Solutions for Fighting Racism in the Asset Management Industry, was held on July 29.

EMM Editor Matthew McCue moderated the July 9 panel, which included Jason Lamin, ceo of Lenox Park Solutions, Brandi Colander of the Diverse Asset Managers Initiative and The Raben Group and Patrick Briaud, head of impact investing at Rockefeller Philanthropy Advisors.

The July 29 panel was moderated by Davies and included panelists Angela Matheny, director of investment staff and diverse manager equity at Colonial Consulting, Tiffany McGhee, ceo and co-cio of institutional investment services at Momentum Advisors and Robert Young III, managing director and head of marketing and client service at Brown Capital Management.

► Data management firm APX Stream will host a data compliance webinar looking at how investment data published to industry data-bases is impacted by updated rules and regulations from the Secu-rities and Exchange Commission.

The webinar, Investment Data Compliance: An Evolving Stan-dard, will include insights from APX Stream and outsourced compli-ance company Cipperman on proposed regulatory updates, the role of investment databases in the due diligence process, how manag-ers can leverage databases as a marketing tool, why investment data is an emerging compliance issue and best practices for compliant data marketing and distribution.

The webinar comes as the firm is in the process of publishing six blog posts that will be combined into a data compliance e-book for individuals. The first post is available on the firm’s website.

The webinar will be held on Aug. 18 at 12 p.m. ET and interested individuals can register here.

► Focus 1 Associates has launched a weekly compliance training podcast through Compliance YOUniversity, a Securities & Exchange Commission compliance training service offered by the firm.

The micro-learning podcast, Krista Clear, is hosted by Director Krista Zipfel. The first podcast addressed the definitions of super-vised person and access person and was posted on July 24. The pod-cast can be accessed here.

The Medford, Ore.-based firm is also producing a periodic compliance podcast called “A Moment of Focus,” consisting of two-to three-minute podcasts discussing relevant compliance matters.

The podcasts can be accessed here.

Our websites and newsletters offer a uniqueopportunity for your firm to gain exposure to thousands

of plan sponsors, consultants and asset managers.

Learn about our offerings in our ad kit or contact us at [email protected].

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Antoinette Bing joined emerging manager-of-managers Lead-ing Edge Investment Advisors as senior v.p. of client service in July, Founder, President and CEO Clayton Jue confirmed, in an e-mail.

Bing’s addition comes as Director of Business Development and Client Service Dani McLeod retired last month, Jue said.

“We are very grateful for her contribution to LEIA since our 2005 firm inception and all wish her the best,” Jue said.

Bing was most recently director of client service and mar-keting for Metis Global Partners and prior to that was director of marketing and client service for the now shuttered Herndon Capital Management, according to LEIA’s website.

She joined Metis in 2016 (EMM, 11/3/16).Bing’s responsibilities have been assumed by existing mem-

bers of the Metis team, President and CIO Machel Allen said, in an e-mail.

“We have the warmest wishes for Antoinette in her new role at LEIA,” Allen said.

Leading Edge Adds Senior V.P. Of Client Services


https://www.youtube.com/watch?v=lFFCg_X5GbQ&feature=youtu.behttps://www.youtube.com/watch?v=lFFCg_X5GbQ&feature=youtu.behttps://www.youtube.com/watch?v=7fQRAWr2MDQhttps://www.youtube.com/watch?v=7fQRAWr2MDQhttps://www.apxstream.com/insightshttps://www.apxstream.com/investment-data-compliance-webinar?utm_medium=email&_hsmi=92345392&_hsenc=p2ANqtz-8L1L-RwNImSCrZC5KeQz8n3TiYzhr0NP24NVytn8P6AnIWtDUv-9atZ4c0S7WUpgKTht6MOgrURKWLvNKOnUCylGqLgA&utm_content=92345392&utm_source=hs_emailhttps://2064-7.com/latest-krista-clear-podcast/https://focus1associates.com/podcast/https://www.fin-news.com/wp-content/uploads/2020/07/Ad-Kit-2020.pdf

Segal Marco Advisors has created an action plan to raise aware-ness of the current state of minority representation in the firm’s manager universe and within client portfolios.

The action plan was formalized by the investment consult-ing firm’s Diversity Investing Working Group (DIWG), which was formed in 2018 to examine areas of potential unintended biases embedded in the manager vetting process as well as shortcom-ings within the investment manager community.

“Since formation of the DIWG, Segal Marco Advisors has ex-panded the scope used to source emerging and minority man-agers to include less traditional paths, including trade groups and associations,” Senior V.P. and CIO Tim Barron said, in a writ-ten response to questions. “As part of its structure, the DIWG deliberately included analysts from each major asset class to ensure proper evaluation, and to facilitate advocacy and inclusion of these managers throughout the investment decision-mak-ing process. The DIWG has also elevated the knowledge of our consultants and research teams regarding the universe of investment managers that exist in the emerging and minority-owned spaces through group forums.”

Barron was responding to questions spurred by a piece written by members of the DIWG team, Disrupting the Status Quo and Promoting a Better Future, that can be read on the firm’s website.

In looking at Segal Marco’s current engagement with di-verse managers, the firm’s clients have roughly $11.7 billion in-vested across 35 minority- and women-owned firms, which ac-counts for roughly 4% of client assets under advisement. The investments are across 238 different accounts within 130 client portfolios.

From a research perspective, roughly 6% of the firm’s 1,200 meetings in 2019 were with minority and emerging investment managers.

“Each figure represents a considerable improvement in data tracking, largely due to dedicated action by various functions at Segal Marco Advisors,” Barron said. “As data has improved, so has our ability to maintain accountability.”

To further its efforts, the firm will host a virtual small, emerging and diverse investment manager event later this year that will allow managers to interact with key research profes-sionals at Segal Marco. The event will take place over two days and will look to have 20 to 25 engagements per day staggered in 30-minute increments with multiple “rooms” at once.

The first event is expected to be equity-specific and thefirm will encourage managers in the non-U.S. and domestic small-cap asset classes to submit information.

“The goal is to arrange asset class-specific conversations

that take into account current research and client demand for investment strategies to enhance potential traction and num-ber of potential full due diligence engagements post-event. We plan to offer multiple sessions to incorporate other asset classes throughout the year,” Barron said.

The firm has also developed a structured outline of what will occur post-event that includes each asset class team re-viewing the findings as a group and completing a standard in-house document that can then be used to provide feedback and clear guidance for next steps with the manager, among other

items. “This is intended to address the most common point of

event feedback we receive, like: ‘they’re great for introductions, but not much comes from them,’” Barron said.

The firm expects to post updates on the event on LinkedIn.Along with engaging more diverse managers, the firm also

sees the potential to expand the opportunity set side outside of public clients and into the private market sector with multiem-ployer or Taft-Hartley clients as well as within defined contri-bution plan lineups or within target-date fund custom lineups.

The firm has also defined diversity to expand beyond firm ownership in order to recognize diversity in other forms, in-cluding decision makers and equity stakeholders, Barron said.

Segal Marco was conducting an ESG survey of 100 managers with the most assets of its clients. The survey found that the composition of leadership teams skewed heavily white and male and additionally found that nearly half of survey respondents have no racial minorities on their boards of directors and slight-ly more than one-fourth of respondents reported no women on their boards.

“We were surprised that pay parity was rarely an issue at the firms that reported having examined it. We were not sur-prised that the investment management industry skews white male and we expect to see changes over time,” Barron said.

One way the firm will assess that is through conducting the survey annually and tracking internal ESG factors over time.

“Managers will be held accountable by their own data rel-ative to competitor firms,” Barron said. “The data allows us to assess whether ESG centric managers apply the same lens to their internal operations.”

Segal Marco Works To Expand Emerging & Diverse Mgr. Opportunities


Each figure represents a considerable improvement in data tracking, largely due to

dedicated action by various functions at Segal Marco Advisors. As data has improved, so

has our ability to maintain accountability.


https://www.segalmarco.com/research/r2-blog/disrupting-the-status-quo-and-promoting-a-better-future/https://www.linkedin.com/company/segal-marco/

www.GarciaHamiltonAssociates .com

You can watch it here: https://www.sec.gov/video/webcast-archive-player.shtml?document_id=071620_AMAC_Meeting_

CNBC Interview – July 16, 2020https://www.cnbc.com/video/2020/07/16/sec-hosts-hearing-on-diversity-in-asset-management.html

Yahoo Finance Interview – July 17, 2020https://finance.yahoo.com/video/fixed-income-ceo-asset-management-170424584.html?.tsrc=fin-srch

Emerging Manager Monthly:https: //emergingmanagermonthly.com/2020/07/16/sec-must-put-impetus-on-requiring-diversity-data-panel/

Pensions & Investments:https://www.pionline.com/governance/institutions-want-manager-diversity

https://www.pionline.com/money-management/asset-management-diversity-numbers-too-low-sec-panel

Houston Chronicle:https://www.houstonchronicle.com/business/columnists/tomlinson/article/Texas-executive-tackles-nationwide-systemic-

15424292.php

Wall Street Journal:https://www.wsj.com/articles/sec-criticized-for-inaction-in-diversifying-asset-management-industry-11594945813

FundFire:https://www.fundfire.com/c/2815573/347063?referrer_module=searchSubFromFF&highlight=SEC

For more information , please contact :

Ruby Muñoz Dang

713-853-2359

Ruby@GarciaHamiltonAssociates .com

Awards/rankings may not represent client experiences and are not indicative of future performance.

Go to www.garciahamiltonassociates.com/awards/ for additional information on each award.

Thanks to the SEC for appointing Gilbert Garcia to the AssetManagement Advisory Committee. We are proud to have led the

recent panel to discuss improving diversity and inclusion in the assetmanagement industry. Thank you to SEC Chairman Jay Clayton andDirector, Division of Investment Management, Dalia Blass for makingdiversity a priority. And, thanks to committee Chairman Ed Bernard

and SEC team member Robert Marchman for their support. Thanks to our panelists: Robert Raben (DAMI), Juan Martinez (Knight

Foundation), Brenda Chia (AAAIM), Ron Parker (NASP), SolangeBrooks (NAA), and Robert L. Greene (NAIC).

If you missed the panel or any news coverage, it was phenomenal.

http://www.garciahamiltonassociates.com


INT’L: MayTech Rides Digital Trend To Strong 2020 PerformanceContinued From Page 1

firm has a cautious outlook on non-U.S. markets.

“Given the uncertainty and increased cloudiness around the current economic recovery coupled with the strong equity returns that we continue to see, I think it is fair to have a cautious outlook on eq-uity returns of the second half of 2020,” said David Hernandez, senior research analyst for non-U.S. equities at Mar-quette, during the review.

In reviewing manager performance, 62 global equity strategies screened through the PSN Informa database showed an average return of 19.26% for the second quarter, with 14 of the 62 strategies post-ing positive year-to-date returns through June 30. Among 77 in-ternational equity strategies re-viewed, the average second quar-ter return was 17.7%, with just five managers having positive year-to-date performance.

Global equity also saw the strongest individual manager performance, with Blackcrane Capital’s global equity strat-egy returning 47.58% in the second quar-ter, a recovery that left the firm with a 15.13% return in the first half of the year.

MayTech Global Investments had the second highest returns among global eq-uity managers in the second quarter at 40.1% and now has the highest returns among global equity managers half way

through the year at 30.65%. The firm through July has a gross return of 45.11%.

MayTech Co-Founders Nels Wan-gensteen and Ingrid Yin credited the strong performance to the firm’s focus on technological changes, which has been bolstered by the worldwide move to dig-ital services.

“We outperformed in this market be-cause we are well positioned to take ad-vantage of the secular growth of the digi-talization of the economy,” Yin said.

Wangensteen said the coronavi-rus has led to an acceleration of secular

trends that were already under way.“This is both good and bad. On the

good side you see accelerated adoption of a lot of the new services and a lot of the digitalization of the economy. And on the negative side, you see the accelera-tion of the problems of businesses that were already in long term secular de-cline, such as brick and mortar retail and maybe even energy,” Wangensteen said.

He also said the firm benefited from

its coverage of China, which allowed the investment team to have early insights into the impact of COVID-19 on the econ-omy and how the government responded.

“We also saw the massive liquidity that China injected into their economy and it really was supportive of equity val-uations. I think a lesson everyone learned even from the financial crisis was the im-portance of governments acting quickly with financial support, both monetary and fiscal support, which we saw global-ly, was very encouraging,” Wangensteen said.

One area moving forward for inves-tors to keep an eye on is how the virus impacts corporations and how countries do business.

“I think this is going to cause a re-thinking of concentration of supply chains,” Wangensteen said. “I don’t think that means repatriation of manufacturing necessarily, but it means more diversified distribution and less concentration of the supply chain.”

We outperformed the market because we are well positioned to take advantage of the secular

growth of the digitalization of the economy.

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Meketa Investment Group Managing Principal and Co-Director of Pub-lic Markets Research Brandon Colόn recently discussed challenges and opportunities that clients are currently facing as a result of the pan-demic during a June 24 webinar hosted by financial services network StoneX.

One of the biggest challenges facing clients right now is “adapting to this new work from home environment and making sure that they adjust their governance structure so that they can continue to execute on their investment objectives within the parameters that they set up for themselves,” Colόn said.

Part of that adaptation was adjusting to more virtual formats of communication, such as video, which presented a challenge to some of their clients.

“Our clients in the public fund [space] are used to having open in-vestment committees. They have governance checks and balances in place that they needed to follow over time. They’re used to interviewing managers in person. They’re used to going through a pretty formal due diligence process so that they can make investment recommendations to their boards and their trustees,” Colόn said.

“Certainly not being able to bring managers in house to interview them on site has required that we pivot a lot to using video and there was a little bit of a learning curve for some of our client bases,” he added.

Another challenge Colόn mentioned was the different opportuni-ties arising from the market pullback such as opportunistic or disloca-tion funds, or managers coming to market with new products, he said.

“Being able to handicap where the market opportunity is when you have a pullback like we did in Q1, being able to organize it in a way that’s most relevant for your plan, make sure you’re focusing your team and your team’s time and attention on the right opportunity sets I think has been also a big challenge for our clients as well,” he continued.

When asked whether Colόn has recommended any tactical chang-es to clients’ portfolios, he noted that some of Meketa’s clients used the first quarter disruption and resulting volatility “as an opportunity to re-balance” and that the firm’s manager research team has used it as “an idea sourcing mechanism” to find where the dislocations are.

“We continue to look at some of those specific opportunities, like the TALF opportunity that you’ve probably heard of, and we also have our eye out for distressed scenarios, whether it be in the private mar-kets or in the public markets space,” he said.

Colόn also discussed Meketa’s emerging and diverse manager re-search process and initiative during the webinar, noting that the firm’s emerging and diverse manager research day for public and private mar-kets managers originally scheduled for April 2 in the firm’s Westwood, Mass. office has been postponed to “late October.”

“It’s a very fluid situation with the phased reopening being different in every state and then managers’ travel policies and our internal travel policy…we’re still not sure if we’re going to be able to follow through on those in-person meetings but we’ve already had discussions about whether or not we can replicate some of the models that we’ve seen out there and host virtual meetings,” he said.

He also gave advice for how managers can continue to differentiate themselves in the current environment.

“Be proactive and continue to stay in front of the LP and allocator community. If there’s ever any time to give LPs and allocators a case study on how your strategy is differentiated, it’s probably now,” Colόn said. “We’ve gone through a decade’s worth of volatility in six months and we continue to see volatility on the horizon, there’s a ton of eco-nomic uncertainty moving forward that we’re not sure we’re going to get a ton of clarity on in the near-term.”

“Of course, times like this, LPs and allocators are drinking out of a fire hose so to speak, so there has to be some patience involved with that because I think that we’re trying to sift through a lot of the noise to figure out what the next steps are and how our clients want us to focus our time and our efforts on the best risk adjusted spaces,” he added.

For emerging managers specifically, Colόn said it’s important to “be proactive with their case studies, their ideas and make sure that they’re staying in front of allocators through various means—attending the cap intro events, reaching out directly, signing up for our emerging and di-verse manager day—things like that, certainly are important to maintain the dialogue with the right investors.”

Meketa Director Discusses Challenges, Opportunites During Pandemic

EMERGINGMANAGERMONTHLY.COMQuarterly Reports, Issue Archives & More


http://www.emergingmanagermonthly.com


The recent widespread protests of racial inequality have led many asset owners to consider how they can activate their in-vestment portfolios to advance racial and social equity, accord-ing to a recent report.

Cambridge Associates’ Racial Equity Investing: The Time Is Now identified three steps in investment practices and port-folios to help address racial inequity: making racial equity an investment priority and codifying it in the investment policy, starting to allocate capital to racial equity investments and put-ting racial equity at the center of the investment selection pro-cess.

“The broader public aware-ness from our current national discourse is bringing these topics to the fore front,” said Managing Director Wendy Walker, a con-tributor to the report. “The na-tional discourse prompted us to issue this paper which hopes to highlight our learnings and take advantage of this current dia-logue and lay out our playbook so a broader range of asset owners can activate their own portfolios.”

The Boston-based consult-ing firm finds that to make racial equity an investment priority, institutions need to first hold conversations at the leadership level or through an investment committee to establish a plan to learn more racial equity. Those conversations can involve bring-ing in external advisors with expertise or leveraging knowledge of peer networks that are already engaging with racial equity investments, according to the report, which notes that fami-lies and foundations should also consider their broader philan-thropic and programmatic activities and how these investments may complement or even enhance efforts to address racial in-equality already underway.

“In many cases when an organization takes a step back and thinks about their programmatic goals, they are looking to ac-tivate more than the 5% of the portfolio they payout each year,” Walker said. “There has been a growing recognition for well over a decade that more can be done. At Cambridge Associates we are aiming to proactively initiate conversations with our clients about the benefits of racial equity investing. We believe very firmly that racial equity investing offers more than just societal benefits, it’s also an alpha opportunity.”

After institutions hold the difficult discussions on how they plan to tackle racial equity investing, they should codify solu-tions within their investment policy statements, making sure to define the purpose, priorities and principles behind the ini-tiatives. Walker noted that it also important for institutions to communicate these preferences to advisors and managers once implemented into the investment policy.

“What our experience has taught us is that intentionality is

critical,” Walker said. “Some investors may frame their stance as ‘we want to be colorblind in asset allocation.’ Our observation from experience is that a colorblind approach to asset allocation tends to perpetuate the status quo and that status quo is un-derinvestment in diverse managers. This is why the investment policy statement is critical.”

From there, investors can begin to further build out their racial equity investments. Cambridge Associates encourages or-ganizations to focus on two areas to create the most impact: increasing capital access by allocating to racially diverse man-agers and/or those managers that back diverse founders and management teams and intentionally seeking managers that in-vest in businesses with products and services that benefit and empower communities of color, according to the report.

“It is important to think about the economic rationale as to why these diverse teams have been able to deliver outsized re-turns,” Walker said. “They are positioning themselves to address the needs of an increasingly diverse population...Many sectors of the economy touch on these racial equity themes—we see large disparities in education, healthcare outcomes, access to finance, air and drinking water quality. So, these are huge costs to society and there are large economic incentives for compa-nies who can deliver results and close disparities on any of these broad number of topics. That is why we emphasize that it is in investors’ best interest to make racial equity investing core.”

As investors begin to deploy capital across the two areas of focus, the firm finds that it is important to “dig deep and tease out” what type of impact the institution is seeking with each investment from supporting new, emerging managers in the earliest stages, to investing in an established diverse-owned manager to create more growth within those firms, to allocating capital to allocating to an African American portfolio manager within a larger asset management organization, or potentially a mix of all three, according to the report.

“One of the areas where Cambridge has been most success-ful is investing in early or younger firms—first, second or third time [funds],” Walker said. “Many diverse firms do skew newer and smaller and this is an area where other investors are per-haps overlooking talent, overlooking opportunities and it gives us an opportunity to source, identify and diligence these teams and strategies.”

For investors that have a focus on deploying capital to firms owned or led by African Americans, Cambridge Associates rec-ommends a 33% hurdle to define a diverse firm or team and en-courages investors to consider both ownership and leadership of firms or strategies when allocating capital.

“A 33% level of diversity allows an organization to avoid the risk of hyper visibility or stereotypes or frankly tokenism if there is just one single diverse individual on the board,” Walker said. “We see this 33% level as reaching critical mass, where [di-versity] is normalized and there is more comfort, you don’t have

Cambridge Sees Timely Opportunity For Racial Equity Investing

Wendy Walker


Continued On Next Page

Blueprint Capital Advisors has sent a cease and desist letter to the New Jersey Division of Investment as part of an ongoing racial discrimination, retaliation and fraud lawsuit filed in June.

Blueprint alleges that it received information relaying retal-iation from “a credible source” regarding what appears to be an attempt by the state fund to “interfere with Blueprint’s business dealings, allegedly calling the firm’s clients with the intent of get-ting them to terminate or reduce their relationship with Blue-print,” according to the firm.

“It has come to our attention that senior officials with New Jersey’s Division of Investment (the “DOI”), including DOI Direc-tor Corey Amon, have been contacting Blueprint’s other investors for the purpose of tortiously interfering with the Company’s busi-ness relationships,” Attorney Lawrence M. Pearson of Wigdor LLP, wrote in the cease and desist letter, which was provided by the firm.

Black-owned hedge fund-of-funds firm Blueprint sued the New Jersey State Treasury for racial bias and the funneling of proprietary documents to BlackRock Alternative Advisors in set-ting up a fund in the same “FAIR” program on June 23 (EMM, 7/1). BlackRock and alternatives consultant Cliffwater, which works with New Jersey, were also named in the suit, as previously re-ported.

Blueprint CEO Jacob Walthour, who founded the firm in 2015

with President Carrie Pickett, alleged in the complaint that the division of investment officials admitted to him that the agency “had an aversion to minority- and female-owned” firms and that BlackRock was “setting up with New Jersey the same program as Blueprint has proposed.”

The cease and desist letter states that conversations with relevant parties led Blueprint to become aware that division em-ployees contacted at least one of the firm’s other clients “in a transparent and retaliatory attempt” to have it “pull out of its in-vestment in Blueprint.”

“The conduct of the DOI and its representatives (including, but not limited to, Mr. Amon) is unlawful and inexcusable, and they must cease and desist from these and similar actions imme-diately,” the letter continues. “If DOI and its officials are some-how still ignorant (which is no excuse or defense) of the fact that Blueprint’s assertion of legal claims and the filing of its lawsuit are legally protected against retaliation by the Defendants, then this letter is their written notice that they must stop such conduct right now.”

Blueprint’s mandate with the New Jersey fund was valued at approximately $76.7 million as of May 31, according to a monthly investment report.

A division spokeswoman did not respond to an e-mail seeking comment on the allegations.


Blueprint Sends Cease & Desist Letter To New Jersey DOI

CAMBRIDGE: Diverse Manager Investing A ‘Holistic Change In Mindset’Continued From Previous Pageone individual bearing the burden of being the view or voice of diversity at large.”

When it comes time to put racial equity at the center of the investment selection process, Cambridge Associates asks investors to consider managers’ culture, competency and the community they wish to impact throughout the investment due diligence and ongoing monitoring processes.

When looking at a manager’s culture, Cambridge Associates asks what is the firm’s policy on diversity, equity and inclusion, what steps does the firm take to adhere to these commitments in their operational and investment practices and how does the firm systematically address implicit bias in decision-making in both investment and management contexts?

In reviewing a manager’s competency, the firm wants to know if the asset manager has the cultural competency to ad-dress the needs of racially diverse communities and evidence that the solutions or products they are providing are grounded in the reality and needs of the community, which leads Cam-bridge Associates to ask how the needs of the community the manager wants to impact are considered in the investment de-cision-making process, according to the report.

Walker noted that having a Rooney Rule or explicit diversity targets as part of the investment selection process are good for measurement of data and transparency, but “not sufficient to make meaningful change.”

Walker asks that investors think in a broader context when evaluating and selecting managers through looking into the founders and management teams of the underlying companies in the portfolio and whether the products and services of the com-panies are meeting the needs of diverse communities because this is going to tap into the alpha opportunity and the economic drivers of why the themes can deliver outperformance.

“We don’t think about racial equity investing or diverse manager investing as just an asset allocation bucket to fill, but it is a more holistic change in mindset,” Walker said. “It makes sense because racial inequalities are systemic problems, so we need a systemic solution.”

Cambridge Associates currently tracks 500 diverse manag-ers and 1,000 diverse strategies and of that universe, approxi-mately 40% receive funding, according to the firm.

Diverse managers make up 10% of the overall market, but receive only 0.8% of assets under advisement, while Cambridge Associates’ funded diverse managers represent approximately 5% of the overall pool of funded managers and also hold approx-imately 5% of assets under advisement.

“While this correlation of capital compares favorably to the rest of the market’s 0.8%—we’re committed to doing better. During this time of increased awareness and need, our global community is leaning in, more than ever, to drive equity in our organization and in the communities we serve,” the firm said.


Investment consultant Verus has published a paper encourag-ing a broader consideration of diversity at asset management firms to focus on investment team composition.

The paper, Broadening Diversity Consideration, discuss-es how the composition of investment teams is an important component to capturing the benefits of diversity—including improved chances for strong investment outcomes and the likelihood of achieving diverse ownership goals.

Verus CIO Ian Toner said that the idea for the piece came from trying to understand cognitive diversity and thought and how that connects to decision making with the hope that ex-panding its discussion on diversity beyond ownership—which he acknowledges is a good metric—brings more firms into the conversation.

“We are really big on focusing on a manager and their align-ment structures. How are they incentivizing people to contrib-ute good ideas,” said Toner, who wrote the paper with Managing Director of Public Markets Marianne Feeley.

Toner said that while equity ownership is an important component of measuring diversity, for large global publicly traded firms and others that are not majority women- or mi-nority-owned, it is important to consider how to measure and recognize their organizational diversity.

The paper states that, “Equity ownership is an excellent metric—but signs of a clear path to ownership, and a truly in-clusive environment for all while working down that path can make the diversity discussion more multi-dimensional and may help investors better understand the managers with whom they

may choose to do business.”Beyond standard diversity metrics, Toner discussed how

Verus is looking to build a more well-rounded view of managers through understanding work practices and behavior practices that help build cognitive diversity within a firm.

“We are trying to build a richer picture than is available just from an ADV,” he said. “All of these things are about building a better understanding of how managers go about doing their jobs.”

Feeley said the firm looks to evaluate behavior-oriented aspects of managers to understand how alignment, edge, im-plementation, use of risk and performance interact.

“It allows us to think of things in a wholistic manner,” she said.

The full piece can be read on the firm’s website.


Verus Paper Examines The Path To Broadening Diversity

We are really big on focusing on a manager and their alignment

structures. How are they incentivizing people to contribute good ideas.

The National Conference on Public Employee Retirement Sys-tems and the National Association of Investment Companies have entered into a strategic relationship to bolster the use of diverse asset managers within the public pension fund space, Executive Director Hank Kim announced during an NAIC In-sight Series webcast held on Aug. 4.

The agreement aims to bring members of NCPERS, the largest trade association for public pension plans, with mem-bers of NAIC, the largest network of diverse-owned private eq-uity firms and hedge funds.

“This is something that we need to do given where the country is currently and recognizing the systemic injustices and all the things that we are currently seeing,” Kim said, while discussing the collaboration.

“We are not the fastest adopters, but once we do enter a space, we enter it full bore and we are fully committed to mak-ing diversity and inclusion a major platform for NCPERS,” he noted.

Robert Greene, ceo and executive director of NAIC, said the collaboration will look to ensure broader diversity in the public employee pension plan space.

“We look forward to demonstrating the outstanding per-

formance that has been the hallmark of our existence in this space,” Greene said.

Kim said that while NCPERS’ staff is diverse, the organiza-tion recognizes that its board, conference speakers and corpo-rate membership can be more diverse.

“Honestly, we need to do better at that and we are working on making that happen,” Kim said, adding that the organization will look to be more closely affiliated with organizations like NAIC so that NCPERS members are exposed to a more diverse set of managers.

Kim also discussed diversity within the public pension space during the webcast.

“Are we where we would like to be relative to diversity of asset managers, even internally? Probably not. But I think the conversations are still going. Speaking in broad strokes, I think for the first set of years, diversity and inclusion were largely driven by trustees. I think there is more of an acceptance of the value of diversity and inclusion on the investment staff over the last handful of years, so I think that is encouraging. But I think we still have a long way to go and I would like for us, NCPERS, NAIC and others to help public plans get there quicker and more broadly,” Kim said.

NCPERS, NAIC Partner To Boost Public Pension Diversity


https://www.verusinvestments.com/wp-content/uploads/2020/07/Broadening-Diversity-Consideration.pdf

The COVID-19 pandemic has had an impact on vir-tually every aspect of life and internships were not spared, but financial ser-vices firm Penserra stepped in last month to help.

Penserra held a vir-tual internship day that provided 230 attendees an opportunity to learn about the firm’s various business lines.

The event aimed to be a resource for students who have lost internship opportunities due to the COVID-19 shutdown, said Connie Kreutzer, managing director and head of insti-tutional sales at the firm.

“It is a year when it is more needed than ever,” she said.

The idea originated with the firm’s diversity and inclusion committee, which focuses on promoting diversity within the firm and the industry broadly, as a means to make up for the lack of ability to hold in-person internships this year due to all but two of the firm’s 60 employees cur-rently working virtually.

The four-hour event was held on July 30 and included presentations from 24 of the firm’s employees across its five busi-

ness lines: equity trading, fixed-income trading and sales, investment banking, eq-uity exchange and Exchange Traded Fund sub-advising.

Attendees included juniors and se-niors in college, graduate students and professors, with the majority based in the U.S. but some attendees located in Can-ada, South Africa, Asia and the United Kingdom.

Polling conducted during the event found that over half of attendees are

looking at jobs in the financial area that are not trading or portfolio management, according to Kreutzer.

“People that are getting ready to en-ter the job force have their arms around the fact that technology and program-ming and data are a big part of our field,” she said, adding that the firm was inspired by the interest garnered by the event.

“Just because you are a smaller firm, you can still provide a lot of good with the resources you have,” she said.


Financial Services Firm Penserra Hosts Virtual Internship Day

Domestic small-cap growth equity manager Elk Creek Partners has closed.

The Denver-based firm informed general investment con-sultant AndCo Consulting that it had closed after “the loss of several key investors,” according to May 20 meeting minutes of the $554 million Louisiana Clerks of Court Retirement and Re-lief Fund, as reported by sister publication fin|daily last month.

The loss includes Harbor Funds, which closed its small-cap growth opportunities mutual fund managed by Elk Creek around April 24, according to a first quarter investment report by general investment consultant NEPC for the County of Los Angeles Deferred Compensation and Thrift Plan.

The fund’s closure was due to “sustained period of under-performance in the Harbor Small Cap Growth Opportunities Fund that Harbor believes is unlikely to improve under its cur-rent management,” NEPC stated, in the report.

As a result of the mutual fund’s closure, Elk Creek’s assets under management declined in the “30% to 40% range,” ac-cording to the NEPC report.

Elk Creek, which had assets under management of $896 million as of a Feb. 12 Form ADV, stated that its breakeven is $150 million AUM to “keep the lights on,” according to the NEPC report.

AndCo is currently conducting a replacement search for the Louisiana plan, while Senior Finance Analyst Herbert Nishii of the Los Angeles plan did not respond to multiple messages seeking comment.

The firm terminated its SEC registration on July 5 and its website has been delisted.

Elk Creek was launched in 2011 by five former members of the Montgomery Small-Cap Growth Team of Wells Capital Management (EMM, 5/4/11).

Elk Creek Partners Closes After Key Investors Depart


As COVID-19 cases in the U.S. remain high in many parts of the country and ominous warn-ings about another wave of cases in the fall as the weather turns colder and schools re-open, the prospects for a return to normal for many are not favorable.

For the asset management industry, that means maintaining expanded virtual offices and a continued halt to on-site due diligence.

While many investors and consultants spent the first few months of the pandemic focusing on their ex-isting portfolios and completing investments that were already in the pipeline, some are now beginning to address how their due diligence processes will be impacted by a prolonged virtual world—particularly as it relates to identifying and vetting new man-agers.

“At the moment and for the near-term fu-ture, on-site due diligence will not be able to be conducted, so I think everyone is making the best use of the current situation. We do not want to hinder any opportunities for that kind of full due diligence or introduction of new firms. So, we will continue to do our due diligence virtually and do the best that we can doing that. Our goal is not to have that be an impediment to new firm introductions or rec-ommendations,” said Lauren Mathias, a senior v.p. at investment consultant Callan and head of the firm’s Callan Connects program, in a re-cent webinar hosted by the firm.

Ian Toner, cio at investment consultant Verus, said the firm has focused on identifying the key areas that an on-site visit would ad-dress rather than viewing it as a box to check in its process.

“A lot of the approach we try to take to things is think hard about why you are doing an on-site. What are the things you are trying to learn and make sure you are learning those things,” Toner said.

Marianne Feeley, managing director of public markets at Verus, said that virtual meet-ings provide an opportunity to have more contact points at a manager. “The advantage of that is we can talk to that analyst that sits in the corner,” she said.

As to the need for on-site meetings, “It depends on the investment firm and it de-pends on the questions that remain to be an-swered,” she said.

GCM Grosvenor, which is known for its work in the emerging and diverse manager space within private equity, real estate, hedge funds and infrastructure, said that in instanc-es where a material issue arises and cannot be fully diligenced or sufficiently mitigated

without an on-site meeting, it simply will not invest. But otherwise, the firm said investors must be flexible in the current environment.

“Flexible investors will think differently about what constitutes an ‘on-site’ visit and how to achieve its objectives within an overall due diligence process remotely,” the firm said in a post last month addressing virtual due dil-igence.

The firm pointed to the value of existing relationships and a strong operational due dil-igence program as keys to sustaining a virtual manager research presence, even within the emerging and diverse manager space where many new firms are launched by experienced professionals departing or spinning out from established managers.

“Investors with broad relationships, ro-bust monitoring, and multiple touch-points at large firms will be more familiar with port-folio managers, and therefore they have a first-mover advantage when those portfolio managers launch their own firms,” the firm said.

Deb Clark, global head of investment re-search at Mercer, wrote in a recent LinkedIn post that while the current situation has shown the value that virtual meetings can bring to the due diligence process, in-person meetings and on-site due diligence will not go away.

“When we’re able to, meeting face-to-face will continue to be an important part of what we do, researching strategies at Mercer. Understanding team dynamics is a part of our research process that will always benefit from being in the room, reading body language, seeing who dominates discussion and who struggles to be heard. However, there is also a place for virtual meetings where we are look-ing to get a short update or where we want to

drill down into particular area of the strategy. Using virtual meetings allows both us and the asset manager to have more diversity in at-tendees at the meeting –from different geog-raphies and at different levels of the organiza-tion,” she wrote.

Another item that came up during Cal-lan’s webinar was the concept of investment managers giving up their office and going 100% virtual. Mathias noted it was not an issue she had thought about and acknowledged that the move from a cost perspective makes sense, but ultimately said managers will need to have a location to service clients and consultants.

“I think there is a benefit of having one location, maybe it isn’t large, maybe its small, but having one central location to house all of these interactions I think will still be really helpful, even if the majority of the staff is re-mote,” she said.

Anne Maloney, senior v.p. in Callan’s Insti-tutional Consulting Group, agreed.

“There is an expectation that you have a physical presence somewhere. It doesn’t need to be a huge built-out office but it does need to be a location where you have clients that are able to visit you or consultants are able to vis-it you to see you in person, face-to-face, and look around and make sure you are legitimate-ly in business to service the clients,” she said.


Institutional Allocators Begin To Address Virtual Manager Due Diligence As On-Site Visits Remain Grounded

We will continue to do our due diligence virtually and do the best that we can doing that. Our goal is not to have that be an impediment to new firm

introductions or recommendations.


https://www.gcmgrosvenor.com/2020/07/02/effective-due-diligence-in-a-virtual-world/?utm_source=social&utm_medium=linkedin&utm_campaign=invperphttps://www.linkedin.com/pulse/researching-from-home-debbie-clarke/?trackingId=8SNCSFyBS7%2BDOs58aPD6uQ%3D%3D&sf235879470=1


On July 10, the SEC issued a risk alert focusing on ransomware and the importance of gen-erating awareness within advisory firms of current threats. The SEC is encouraging reg-istrants to monitor alerts provided by the De-partment of Homeland Security Cybersecuri-ty and Infrastructure Security Agency (CISA) and share the information gathered with third party service providers that maintain client assets and records of your firm.

Dridex MalwareOne alert from CISA highlighted by the SEC is the Dridex Malware. The alert describes how the malware infiltrates systems, typically through Phishing Campaigns, and encour-ages the user to open an attachment. The alert provides useful examples of links and filenames used by the Dridex Malware. The CISA also provides recommendations for best practices to mitigate risks of vulnerability to the Malware.

SEC’s ObservationsThe SEC understands there is not a one size fits all solution to addressing cybersecurity. However, they do provide a list of measure

they found adopted by registered firms. Since the SEC rarely offers policy and process ad-vice, we suggest you review these and seri-ously consider if you need to adopt or adjust your policies.

1. Adopt an incident response plan that incorporates the business continuity plan and ensure regular testing.

2. Provide training to staff to heighten their awareness of the risks and habits they need to adopt.

3. Establish a system to ensure software, firewalls, operation systems, anti-virus and anti-malware solutions are up to date.

4. Enact policies and procedures to ensure user rights are being approved, re-viewed, properly assigned and removed when employees are no longer with the firm.

5. Adopt a strong password policy.6. Utilize multi-factor authentication.7. Implement perimeter security to con-

trol and monitor all incoming and outgoing network traffic.

Lessons Learned1. Educate yourself and your staff. Knowl-

edge is a powerful tool! Take time and sched-

ule to read the alerts provided by CISA and then educate your employees of current threats and what to look for. This doesn’t have to be the CCO, it can be IT (external or internal). We like regular Compliance Education Emails to remind employees of important tech-safety tips.

2. Conduct Phishing Simulation Tests. The more frequently you employ phishing tests, the more prepared your employees are with the right tools and habits they need to prevent attacks.

3. Hire an expert! We will be the first to admit we are not IT experts. As the CCO, it’s your job to know what you don’t know and hire the right people or firm to help you.

ConclusionThis is a good reminder that cybersecu-rity is a risk all firms face and to review your environment on a regular basis. En-sure the best possible controls have been established to mitigate the possibility of a threat. Cybersecurity has been a focus of the SEC for many years and will be for years to come.

Elizabeth Cope has over 15 years of experience working with investment advisers of all sizes, across all asset classes, within the United States and parts of Asia and Europe. She currently assists investment advisory firms and their CCOs with policies and procedures development, regulatory filings, annual review planning and oversight, forensic testing, marketing material reviews, and mock SEC examinations.

SEC’s Ransomware Alert

By Elizabeth Cope, SEC Compliance Solutions

Guest Column

T H E A L L - I N - O N E D A T A B A S E ,D I R E C T O R Y A N D D O C U M E N T S

P L A T F O R M .

Providing manager search leads anddata from U.S. defined benefit,

foundation and endowment funds.

Learn more at finsearches.com


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Have a question about organizationaldynamics, business development bestpractices or how to effectively buildmarket presence and AUM? The NobleArk Ventures team will be answeringquestions submitted by EMM subscriberseach month.

Send your questions to:[email protected].

Looking for clarity around one of thetwelve core elements outlined in TheRoad to AUM? EMM subscribers areeligible for one free curriculum seriesdownload which includes an Audiblepresentation, profile, team workbook andExcel file associated with maximizingyour effectiveness. To receive your freeunit, visit www.noblearkventures.com,select "Curriculum Series", identify theunit you wish to receive and simply emailus your selection at the above address.

With no return to traditionalsales activities in sight, how can we efficiently trade travel for technology?

" A S K S A N D R A "

Sandra Powers Murphy, author of The Road to AUM: Driving Assets Under Management through Effective Marketing and Sales, and CEO of Noble Ark Ventures, a business development and organizational consulting firm, provides the following insight into digital strategies for 2020.

b b d l

As COVID-19 cases continue to soar, the reality is that travel, face-to-face meetings andtraditional sales practices are unlikely for the balance of 2020. Will 2020, the ‘sales year thatwasn’t’, have permanent implications on business development best practices? We believe italready has. We also know that the time is now; utilize the balance of the summer to kick start anefficient review and enhancement of your business development process and pipeline to ensuresuccess regardless of whether we return to the friendly skies. As you may have already realized,there are some distinct advantages associated with the technology for travel trade.

The Technology for Travel TradeIn the midst of the day-to-day challenges presented by the global pandemic comes an opportunityto capitalize on a shift from pricey, time consuming and often unproductive travel, towards a highlyefficient, eco-friendly, digital engagement campaign that has just as much opportunity to succeedas does old school face time. In fact, there are an array of low cost, in-house digital businessdevelopment strategies that can improve both the breadth and quality of your firm’s onlinefootprint without leaving the comfort of your home office. In this two-part series, we will providebest practices on how to efficiently (and successfully) trade travel for technology in the ‘new norm’of business development. This issue will focus on online presence and the ‘first date’ withprospects. In next month’s issue we will focus on active integration of outbound marketing andsales campaigns.

The Interconnected Reality of Marketing and Sales Organizations that have established and maintained autonomous functions for marketing and salesare realizing just how critical their interplay is. Marketing fuels sales, sales fuels marketing, andtogether they create a powerful synergy when timed, tested and implemented under a clearcommunications plan. Step one: create a written communications plan that integrates your team’sbest thinking and resources—both sales and marketing. If there was ever a time to get rid of thesilos, it is now. Resources are too scarce, time is too valuable, and the market is moving too quickly.

Let's Have a First Date - OnlineIt’s 2020; your website matters more than you think. Your firm’s website is one of its most valuable assets at this time—it serves as your ‘firstdate’ with a prospect. Regardless of whether a prospect has stumbled across your services organically or has intentionally sought you out, yourdigital presence is step one in the modern sales cycle. While Search Engine Optimization (SEO) is often thought of as an abstract science,intelligible only to expensive web developers, its core fundamental principles are actually quite simple. Consider your own experience as aconsumer. What subliminal conclusions do you draw from your first few clicks on an outdated website? How interested are you in learningmore about the t

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