Diversifying Investments: A Study of Ownership, Diversity, and Performance in the Asset Management Industry

INTRODUCTION
Research across a multitude of fields and industries has identified
the potential economic and social benefits of diversity. Yet the asset
management industry continues to struggle with a lack of diversity.
Research studies and articles have consistently documented the low level of representation by women and racial/ethnic minorities among asset
managers. Analyzing and exploring diversity in the asset management
industry is vital given its sheer enormity and the wealth it generates ($69.1 trillion in assets under management and $99 billion in profits in 2016).
This report captures insights from a new study about the state of diversity in the U.S. asset management industry. Professor Josh Lerner (Harvard Business School) and Bella Research Group led the research, building
on a similar study published in May 2017. While numerous studies have documented the lack of diversity among asset managers and asset management firm employees, the current research contributes a new perspective by analyzing the diversity of ownership of asset management firms as well as any performance differences between diverse-owned and
non-diverse owned asset mangers.
The research was commissioned by the John S. and James L. Knight Foundation, a private grantmaking organization. Beginning in 2010, Knight Foundation embarked on an effort to diversify the management of its endowment holdings, and as of June 30, 2018, had invested $830
million with diverse-owned firms (representing 36 percent of endowment holdings). Knight supported this study to inform the larger discussion unfolding about diversity in the asset management industry.