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Investing

Most asset owners don’t consider sexual harassment when conducting due diligence – survey

When conducting due diligence on an asset manager, nearly 90% of institutional investors do not inquire about sexual harassment, according to the results of a survey issued by the Investment Management Due Diligence Association.

The results of a survey on the current state of sexual harassment in the investment management industry revealed that not only did 89% of asset owners not inquire about sexual harassment in the workplace, but 76% of investors would still consider investing with a fund manager who has had issues with sexual harassment.

Andrew Borowiec, executive director of IMDDA, said in a phone interview that it is "incredibly risky" for institutional investors to have this attitude, "not just from a moral standpoint ... but also from a business standpoint."

"If the key person from a fund gets caught doing this again, and they get ousted, then all your alpha goes away," Mr. Borowiec explained.

Other findings from IMDDA's survey revealed that 82% of allocators don't ask follow-up questions about sexual harassment if a manager declines to answer questions; 67% of asset owners limit background checks to only principals and senior staff; and 36% of institutional investors aren't checking social media for red flags.

Mr. Borowiec said that going forward, he expects these figures to go down when they conduct this survey annually.

"We're not really different from any other industry in this regard," he said. "The #MeToo Movement caught a lot of people off guard. Up until now, a lot of people weren't really asking these questions."

Added Mr. Borowiec: "I hope the (fund managers) are accepting of this. They're going to get hit with questions on this (going forward)."

IMDDA surveyed 78 endowments, pension funds, insurance companies, private banks and funds of funds from Jan. 23 through Feb. 14. The geographic breakdown of the survey's respondents was: 68% from U.S./Canada, 25% Europe and 7% Asia/Australia.

The survey is available on the IMDDA website.