The number of mandates awarded to diverse-owned firms in searches conducted by Wilshire has nearly doubled since implementing its diverse-owned manager initiative in 2018.
Of the 44 investment manager searches Wilshire conducted in 2020, eight diverse-owned firms, or 18%, were awarded the mandate, up from 13% in 2019 and 10% in 2018, according to a report released by the investment consultant Wednesday.
Joanna Bewick, senior vice president at Wilshire and author of the report, said in a video interview that the firm implemented systems to "put more assets in the hands of talented diverse-owned firms," including making changes to its compensation system and search process for public securities managers.
"We have an important role to play as a gatekeeper in the asset management industry," Ms. Bewick said.
One change was instituting the NFL's "Rooney rule," which dictates that every manager search that Wilshire conducts includes a diverse-owned firm. (The rule was created for the NFL to require teams to interview minority candidates for any head coaching, general manager or "equivalent front office" jobs.)
And the firm has seen tangible results from putting these systems in place. Not only has the number of diverse-owned firms winning mandates from Wilshire grown, but the total number of diverse-owned firms tracked by Wilshire's manager database, Compass, grew 4% annually from 2018 to 2020.
Within Compass, the firm identified 144 diverse-owned firms managing public securities portfolios. Of these 144 firms, 27% are owned by white women, 19% are owned by Asian men and 15% are owned by Black men. Firms owned by women of color represent 10%.
The number of clients investing with diverse managers also grew. From 2018 to 2020, the proportion of Wilshire clients investing with diverse owned firms grew to 35% from 20% and clients affirmed an interest in diverse owned managers.
Another thing that Wilshire tracked was the number of meetings the firm had with diverse-owned firms. Wilshire consultants conducted 95 meetings with 85 diverse-owned firms in 2020, compared to 89 meetings with 58 firms in 2019 and 58 meetings with 39 firms in 2018. The compounded annual growth rate in total meetings was 28%, while the number of firms that Wilshire met with grew by 48%.
"We want to make sure that these (managers) have access," Ms. Bewick said. "Meeting with diverse-owned firms is critical."
Although the figures have gone up after implementing these changes, Ms. Bewick said they "haven't increased to the extent that we'd like them to." Some of that underachievement is out of Wilshire's hands. For example, one large client chose to manage its assets internally, which led to an overall decline in assets placed with diverse-owned firms.
"While we are seeing progress and making an effort, it's clear that the asset management industry is not as diverse as it should be," Ms. Bewick said. "But we're committed to making progress. It's not enough, but we know that we're moving in the right direction."