According to the report, the 12 institutions that fully participated in the study were: University of California System; University of Chicago; University of Colorado; Columbia University; Duke University; University of Illinois; Michigan State University; Princeton University; Rice University; Rutgers University; University of Texas System; and Vanderbilt University. The four institutions that self-reported were Dartmouth College; Harvard University; University of Pennsylvania; and Stanford University.
However, due to the study's low response rate, the researchers could only publish an interim report based on the limited information they have collected thus far, the report said.
The research study defined an asset manager as "diverse-owned" if at least 50% of the firm's equity ownership is held by women and/or racial and ethnic minorities.
According to the report, as of the fiscal year ended June 30, 2021, of the 12 institutions that participated fully in the study, Duke had 32.1% of its AUM managed by diverse-owned firms, followed by Princeton, 26.8%, and Columbia at 18.6%. The other nine institution from this group had corresponding figures ranging from 6.6% to 17.9%.
Of the four institutions that chose to self-report, Stanford said it had 38% of AUM managed by diverse-owned firms, followed by Pennsylvania, 25%; Dartmouth, 24%; and Harvard, 19%.
This is the first year Knight Foundation has collected this data.
Some of the institutions declined to participate in the study due to restrictions on disclosing investments.
"As Knight's past research has consistently shown, a lack of transparency continues to be an enormous barrier to increasing diversity and equity in the asset management industry," stated Ashley Zohn, vice president of Knight's learning and impact program, in the release. "You can't improve what you don't measure."
Michael Posner, director of the NYU Stern Center for Business and Human Rights, stated in the release: "We know that a number of university leaders are working to identify and include high-performing diverse-owned firms to manage endowment funds. But the paucity of reliable data on the ownership of investment firms makes it all but impossible to accurately chart progress or to motivate reluctant schools to do more."
Knight and the NYU Center for Business and Human Rights will publish a fuller report with broader findings when more institutions participate, the release noted.
As for the current interim study, the researchers cautioned in the report that "because of the relatively low participation rate, we cannot assert that the findings in this report are representative of higher education as a whole."
Looking at the broader asset management industry, the report indicated how this field suffers from a lack of racial, ethnic and gender diversity. Minorities and women comprise 70% of the U.S. working-age population and 68% of college graduates, but diverse-owned firms manage only 1.4% of total AUM in the U.S., according to a recent Knight Diversity of Asset Managers study. Or, in other words, despite "no statistically significant performance advantage," firms owned by white men manage 98.6% of the $80 trillion under management in the U.S., the report added.
The Securities and Exchange Commission has also been plagued by low response rates in its efforts to obtain diversity data from asset management firms. Of the 1,263 regulated entities the SEC identified in 2020 to participate in a voluntary diversity self-assessment, only 118, or 9%, responded.
The Knight Foundation declined to comment on the SEC's efforts. SEC could not be immediately reached for comment.
