A growing number of institutional investors worldwide are taking steps to increase the diversity of their workforces.
As they push for their money managers to add more women, minorities and other underrepresented groups to their staffs, they are doing the same with their in-house teams.
"Within our own business we aim to promote diversity and inclusivity at the highest level," said Faith Ward, chief responsible investment officer at the £30 billion ($37.5 billion) Brunel Pension Partnership, Bristol, England. "We demonstrate this through a board where the top positions, chair and CEO, are both held by women, Denise Le Gal and Laura Chappell."
What's more, Brunel's staff has a roughly 50/50 gender split and discloses its gender pay gap even though with less than 250 employees it is not required to do so under current regulations.
Brunel does so to be an attractive and transparent employer. Brunel disclosed that in 2019, female workers' median hourly rate was 41% lower than the men compared with 43% lower in 2018.
Some of these asset owners say that a diverse team leads to better investment performance.
"If diversity and inclusion yields a competitive advantage in the private sector, it stands to reason that making it a priority in all aspects of CalSTRS' operations — especially in investment management — should go without saying," said Christopher Ailman, CIO of the $226.9 billion California State Teachers' Retirement System, West Sacramento, in its latest diversity and inclusion report released in December.
"And with half our assets now managed internally, diversity is more important than ever," he said.
As CalSTRS increases its staff as it rolls out its collaborative investment model, which will bring a larger proportion of its portfolio in-house, officials plan to look for new ways to build an inclusive culture, the report said.
CalSTRS' investment staff is made up of 49 female and 86 male investment professionals, excluding administrative support. Of its 10 officials at the investment director level, four are female and six are male. Meanwhile, 13 of its portfolio managers are female, compared with 29 males.
The gender division reverses among its administrative support staff in which there are 22 female workers compared to three males.
As for ethnicity of CalSTRS' 135 investment staff, excluding administrative: 36 are Asian, 12 are Hispanic, eight are black, eight are Filipino, three are Pacific Islander and 66 are white. Two people were unidentified.
As part of its efforts, CalSTRS plans to expand its current outreach efforts, which include an internship program that has been in place since 2004. In 2019, CalSTRS had 10 interns, including one from Girls Who Invest, a non-profit that aims to increase the number of women in money management, and another from the Seizing Every Opportunity program, a non-profit focused on providing educational and career opportunities to underserved communities.
The Los Angeles County Employees Retirement Association, Pasadena, Calif., stressed the importance of an inclusive culture at its July off-site meeting.
"We are trying to not think conventionally. … We are trying to be dynamic," said Jonathan Grabel, CIO of the $53.6 billion pension fund, in an interview.
In order to have the best investment outcomes, LACERA needs to have motivated people on its team, Mr. Grabel said.
"I think it is absolutely critical ... to hire an inclusive team. Human capital is the most critical aspect of investment capital."
In his presentation to the board at the annual off-site meeting, Mr. Grabel noted that gender imbalance exists at the pension fund, especially at senior levels. Some 31% of LACERA's 37-member investment staff are women. However, 71% of LACERA's staff are people of color.
