Comptroller Stringer Announces First Ever Recipients Of ‘Diverse Practitioner’ Awards

(New York, NY) – On Tuesday, New York City Comptroller Scott M. Stringer announced that he will recognize four investment management firms which invest money on behalf of the New York City Pension Funds for their commitment to diversity in the composition of their investment professionals and boards and in their policies and practices. Despite extensive research that demonstrates diversity leads to better decision-making, prevents groupthink and is correlated with stronger economic performance, there is a startling lack of it among asset managers. Comptroller Stringer will issue the first-ever “Diverse Practitioner” award to two firms in public markets, State Street and Amalgamated Bank, and two firms in private markets, MetLife Investment Management and Standard General, based on the diversity of their organizations and their commitment to diversity in their policies and programs.

“A commitment to diversity not only widens the circle of opportunity, it is important to long-term value creation,” New York City Comptroller Scott M. Stringer said. “We need to highlight this in the investment management industry and among portfolio managers to harness the value that diversity provides. Today, I’m proud to acknowledge four companies that have stepped up and shown leadership by creating real diversity.”

Starting last year, the Comptroller’s Bureau of Asset Management has used diversity as a criterion in evaluating and selecting investment managers by systematically asking current and prospective investment managers about the diversity of their investment professionals and board. The Comptroller’s Office worked with three of the City’s pension funds to create a formal survey through which investment managers would describe the composition of their investment professionals and boards. Additionally, the Pension Funds directed the consultants who help identify investment managers to formally consider diversity in that selection process.

This evaluation regime created a framework, which allows the Comptroller’s Office to publicly recognize diverse managers that promote minorities and women to leadership roles.

As an industry, asset managers are lacking in diversity.

• According to data calculated by the City Comptroller’s Bureau of Asset Management based on the U.S. Equal Employment Opportunity Commission 2013 National Aggregate Report, 83 percent of portfolio managers in the United States are White.
• A Strategic Consulting Group study found that White men own 97 percent of hedge funds. According to Bloomberg, across the 10 largest private equity firms, women account for an average of 10.9 percent of senior managers.

These figures are an even greater cause for concern because of the body of research which demonstrates the value of diversity in promoting long-term sustainable business practices and investment value and lowering risk:

• A 2015 McKinsey study found that companies in the top quartile of racial/ethnic and gender diversity were 35 percent more likely to have above median financial returns.
• A 2014 study published in the Proceedings of the National Academy of Sciences of the United States of America found that racially and ethnically diverse traders had a 58 percent greater ability to calculate accurate pricing and true value of stocks.
• A 2012 Credit Suisse Research Institute study found that companies with women on their boards delivered higher average returns on equity, lower leverage, better average growth and higher price/book value multiples.

“New York City is setting the example of how government and asset managers can promote diversity. The businesses strategies of the ‘Mad Men’ Era simply won’t work today. Diversity is our fiduciary duty, and these four companies are showing how firms that embrace this concept benefit in more ways than one” Stringer said.

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