Although the sheer number of minority- and women-owned money managers seems to have decreased in recent years, their market presence has increased.
In 1991, when Pensions & Investments began tracking these firms, a total of 75 managers with $22 billion in assets under management identified themselves as being 50% or more minority- or female-owned. Today, 58 investment managers -- with $89 billion under management -- identify themselves in P&I's annual survey of investment advisers as minority- or women-owned.
Still at the top
At the top of the list then and now is Payden & Rygel Investment Counsel, Los Angeles, a woman-owned firm with $22 billion in U.S. institutional tax-exempt assets under internal management.
And, thanks in part to the efforts of Rainbow/PUSH Coalition's Wall Street and LaSalle Street projects, minority managers' asset growth is expected to continue.
The Chicago-based LaSalle Street Project recently issued a memorandum of understanding with San Antonio, Texas-based SBC Communications Inc. and Chicago-based Ameritech Corp., which includes an agreement to hire minority managers for their pension funds.
The Wall Street Project, New York, is working with Bell Atlantic Corp., New York, and GTE Corp., Stamford, Conn., to incorporate minority firms in their manager lineups.
Timing is helpful
Darice Wright, executive director of the LaSalle Street Project, said the timing of the agreements was helpful because SBC and Ameritech and GTE and Bell Atlantic are attempting to pair off in pending mergers.
Bell Atlantic and GTE hired Northern Trust of Connecticut, a Stamford-based subsidiary of Northern Trust Global Advisors, to set up their minority manager programs.
Each allocated $50 million to a commingled manager of managers fund called The Discovery Fund overseen by Northern and invested by minority managers.
Participating in the fund was a good way for pension executives at Bell Atlantic to introduce themselves to minority investment managers, said Audrey S. Kent, vice president-internal management of the $37 billion defined benefit fund.
The commingled fund's allocation is 70% U.S. equity and 30% U.S. bonds. It focuses primarily on large-cap equities and core fixed income, she said.
Large-cap managers in the fund are NCM Capital Management Group Inc., Durham, N.C.; Edgar Lomax Co., Springfield, Va.; Paradigm Asset Management Co. LLC, New York; and Peachtree Asset Management, Atlanta. The midcap equity manager is Valenzuela Capital Partners Inc., New York; the bond manager is Seix Investment Advisors, Woodcliff, N.J.
Bell Atlantic may hire additional minority managers apart from the Discovery program, possibly to run assets for the $13.6 billion savings plan, Ms. Kent said.
In January, the pension fund allocated $10 million to the Black Enterprise/Greenwich Street Corporate Growth Fund, a private equity fund sponsored by Black Enterprise magazine and Citigroup to finance the growth of established minority-owned or managed businesses.
GTE announced its commitment to the Discovery Fund at the same time as Bell Atlantic.
In a statement, T. Britton Harris, president of GTE Investment Management Corp., said, "A secondary goal today is to encourage other Fortune 500 companies to consider using qualified minority-owned or -operated investment firms. We're leading by example and hope other companies will follow."
GTE has $15.8 billion in pension assets, according to P&I's 1999 survey of the top 200 U.S. pension funds.
At SBC, officials have earmarked $100 million to be managed by minority firms. According to P&I's survey, the company has $22 billion in pension assets.
At Seattle-based Boeing Co., seven of the 55 firms used by the $38 billion pension fund are minority-owned. Minority and emerging managers may be included in part of the fund reorganization. Gary Bland, vice president-trust investments, will trim the manager list and reallocate assets.
He recently spoke of his company's commitment to diversity at a LaSalle Street Project conference in Chicago.
Mr. Bland hired two African-American-owned firms -- Pugh Capital Management Inc., Seattle, and MDL Capital Management Inc., Pittsburgh. Each will manage $200 million in broad-spectrum fixed-income portfolios.
Another minority firm, Tiffany Capital Advisors, Philadelphia, had its U.S. growth equity portfolio increased by $95 million, moving it to a total of $300 million.
One challenge firms face is getting their names out there. Boeing pension executives are willing to help younger, smaller firms learn to market themselves to plan sponsors, Mr. Bland said.
Rainbow/PUSH's Ms. Wright said, "It's not necessarily a race issue. People do business with those they know." The organization holds bimonthly meetings in Chicago to introduce mainstream corporations to minority businesses.