Last year's horrific events of social injustice put a spotlight on the ugly truth of racial disparity and structural issues in the U.S. It was a collective moment that prompted American companies to reflect on the realities of the nation's long history of discrimination and the silent role that they play as institutions in perpetuating inequality. While we have a long way to go, there have been positive changes and calls for dramatic shifts in the investment management industry as a direct result of this self-reflection.
In this broader conversation around diversity and inclusion, Asian Americans and Pacific Islanders, or AAPIs, are at risk of being left behind because myths of the "model minority" persist. While the recent escalation of heinous hate crimes against the AAPI community has shed light on the history of discrimination and attacks endured by the community, the social and institutional barriers AAPIs had to overcome to succeed continues to be downplayed. In fact, there is a widespread misperception that the AAPI community experiences no or limited obstacles in navigating the investment industry. The reality is that AAPI-owned managers face a steep climb toward equal opportunity and full inclusion.
According to a study published by the Association of Asian American Investment Managers and Bella Private Markets in December, U.S. asset management firms with a majority AAPI ownership represent only 3.5% of the industry total. These firms are also typically smaller and manage just 0.7% of asset under management, despite their performance meeting or exceeding industry benchmarks. This is nowhere near equitable with the Asian Americans and Pacific Islanders who make up more than 6% of the U.S. population.
The findings from this study put a sharper focus on the challenges faced by the AAPI investment community in gaining access to capital. To address that, institutional investors need to expand emerging manager programs to increase opportunities for all diverse managers and make them specifically targeted to woman and minority firms, including AAPIs.