Trade organizations catering to both money managers and asset owners are creating programs to promote diversity in the money management industry.
The CFA Institute, for example, in 2019 launched the Experimental Partners Program, a series of roundtables that includes asset owners and money managers. Over an 18- to 24-month period ending in December, the roundtables are charged with focusing on developing action plans to promote diversity, said Sarah Maynard, London-based global head, external inclusion and diversity strategies and programs.
Participating individuals represented 44 firms, mostly money managers and some asset owners primarily based in North America. The roundtables have quarterly catch-up calls to discuss what is and isn't working and create learning points. Each firm chooses three topics and creates action plans, Ms. Maynard said.
Top of the list is unconscious bias, she said. Unconscious biases are stereotypes of certain groups that people hold without being aware of them.
So far, they've learned that voluntary programs work better in promoting diversity than mandatory ones, Ms. Maynard said.
Firms also have started recruiting programs aimed at hiring the most junior executives with explicit hiring drives at, for example, historically black colleges, she said. They are also building mentorship and sponsorship programs to promote women, minorities and other underrepresented individuals at their organizations, Ms. Maynard said.
"If you don't enable individuals to progress, you will lose them, and retention is very important," she said.
But it will take time for these programs to have an impact. Currently, there is a building focus on metrics.
Five years ago, it was enough for money managers to give their clients a list of programs in place to promote diversity, Ms. Maynard said. Now they have to show where the programs are progressing, she said.
In a survey conducted in the last two months of 2017, CFA Institute reported that 55% of institutional investors stated that mixed gender teams would lead to better investment performance results because of more diverse viewpoints. CFA Institute hasn't re-asked the question but there are "reasonably encouraging indications" of progress, Ms. Maynard said. Female candidates for CFA qualifications rose to 32% from 27% five years ago.
Associations aimed at the real asset and alternative investment industries also are building on programs to encourage diversity.
The Pension Real Estate Association's foundation in March announced a $4 million grant to Sponsors for Educational Opportunity, a non-profit aiming to offer educational and career opportunities to underserved communities, to support the development and growth of a real estate program, said Deborah Harmon, CEO and co-founder of real estate money manager Artemis Real Estate Partners.
The goal is to create "a pipeline of talented students of color to increase employment and improve diversity and inclusion in the real estate industry," said Ms. Harmon, chairwoman of the PREA Foundation.
The foundation was created two years ago "in recognition of the importance of diversity and inclusion in the real estate industry," Ms. Harmon said. "We know this is a serious challenge for real estate and asset management as a whole."
Real estate has the lowest representation of female employees of any alternative investment asset class, with a global average of 17.5%, according to a Preqin report on women in alternative investments released in February. While 35% of junior employees are women, just behind venture capital, only 8.5% of senior real estate executives are female, the only figure in single digits, Preqin shows.
The PREA Foundation and the organization already had a real estate internship program in place that successfully concluded its second summer of internships, placing nearly 100 diverse undergraduates with more than 50 industry partners across the country, she said.
"We remain on track to place another 50 this summer in our third round of internship," Ms. Harmon said.
So far, 23 former interns are currently working full time, she added.
The National Venture Capital Association is also continuing its work to promote more women, minorities and other underrepresented groups in the venture capital world.
"NVCA is committed to promoting an ecosystem in which people of all backgrounds have the opportunity to thrive, one that is marked by a welcoming professional culture and safe work environment, free from any type of harassment, abuse or discrimination," said Maryam Haque, San Francisco-based senior vice president of industry advancement at NVCA.
Among the latest initiative to increase diversity in venture capital, NVCA launched VC University, an online certificate program by the NVCA and a startup program at the University of California Berkeley School of Law "to democratize access to VC education, creating opportunity for people who were previously excluded from relevant networks, mentorship and educational opportunities," Ms. Haque said.
Ten percent of the slots are reserved for individuals from historically underrepresented groups, who are awarded tuition-free scholarships, she said.
NVCA also released along with Deloitte Consulting LLP the second edition of the NVCA-Deloitte Human Capital Survey, which captured 2018 workforce data on the demographics within venture capital firms and diversity and inclusion practices at the firms.
The second edition revealed some progress, but the pace of change remains slow, she said. There are more women investment partners working in venture capital, up to 14% from 11% in the 2016 first edition, but 80% are white. Fifteen percent are Asian/Pacific Islander and 3% each are African American and Hispanic, according to the findings of the survey, conducted in 2018.
Limited partners are pressuring their managers to diversify their workforces, the second edition of the survey found.
The survey revealed that 36% of venture capital firms indicated that their limited partners had requested their diversity and inclusion details within the past 12 months.
"Some LPs are placing more of a focus on D&I," Ms. Haque noted. "It has been encouraging to see ILPA (Institutional Limited Partners Association) recently add a new section on diversity to their due diligence questionnaire for fund managers" as well as releasing a diversity and inclusion road map with best practices for managers and investors.
