Even some of the earliest adopters of diverse or emerging manager programs are finding the need to change as they outgrow their original goals or face mandates to grow.
The Maryland State Retirement & Pension System, Baltimore, started in 2007 with its Terra Maria program for emerging managers. Since then, it has been reinvented and expanded to where 20% of the $62.5 billion portfolio's managers are diverse, CIO Andy Palmer said.
As they continually diversify the portfolio, "this has been a good exercise. ... We believe this is a fundamental part of what we do," he said.
The bigger problem he sees is getting more diverse candidates into the asset management industry. That challenge is gaining "a lot of traction" with public pension funds, he said, and has accelerated by the events of 2020 that brought racial inequalities into sharp focus.
To address the shortage, the pension fund is working with area colleges and even middle schools to promote the career path and to fill its own programs for interns and associates. It also has started collaborating with prominent firms like its Baltimore neighbor T. Rowe Price Group Inc. to improve the numbers.
"It's becoming more of a priority," he said.
Instead of what he calls the "rifle shot" approach of a diverse manager program, he expects more diversity throughout organizations overall. "I think you will see a lot of changes," Mr. Palmer said.
Maryland was one of 11 sponsors to report how much they invest with diverse managers and the number of those managers, questions new to this year's Pensions & Investments survey of the top 1,000 pension funds. Maryland ranked second on that list, investing $12.1 billion with 57 managers. Maryland is one of 27 plan sponsors indicating their plan has a diverse hiring policy.