Executives of OCIO managers said their existing and prospective clients are pushing them to include more diverse money managers in their portfolios as well as firms that are managing strategies based on environmental, social and governance, and diversity, equity and inclusion principles.
"These topics are relevant across the board. Organizations are wondering how they can incorporate both ESG and DEI into their investment portfolios. Investment committees need to figure out how to do ESG and DEI," said Daniel Farley, executive vice president and chief investment officer of the investment solution group of Boston-based State Street Global Advisors, in an interview.
SSGA assists clients in incorporating both areas using internally and externally managed strategies, Mr. Farley said.
SSGA managed $15.9 billion in ESG strategies and invested $3.1 billion with women-, minority-, or disabled-owned managers within OCIO approaches as of March 31, Pensions & Investments survey data showed.
SSGA's worldwide institutional OCIO assets managed with full/partial discretion totaled $181.7 billion as of March 31, an increase of 0.3% compared to the same date a year earlier.
For asset owners, DEI and ESG "both are risk factors that they need to pay more attention to" given climate change and the need for diversity within money management companies, said Suzanne Bernard, OCIO not-for-profit lead at Northern Trust Asset Management, Chicago.
Rating asset management firms on both issues is a big part of Northern Trust's manager assessment, especially when it comes to looking beyond diversity of company ownership to gauge diversity throughout the company, she stressed.
Northern Trust Asset Management had $3.1 billion in ESG strategies managed for worldwide institutional investors and $5.5 billion with diverse managers in OCIO mandates as of March 31. The unit's worldwide OCIO institutional assets under management with full/partial discretion totaled $98.7 billion, down 1.7% compared to March 31 a year earlier, according to P&I survey data.