In a prior post, we explored investor demand for investment management services from minority- and women-owned firms. This post provides Q2 and Q3 2020 updates to the metrics used to triangulate change in demand for minority- and women-owned firms. These metrics are sourced using eVestment Advantage and Market Lens solutions.
One way eVestment clients sift through our database of over 23,000 strategies is by using our screening tool, drilling down to their preferred set of investment options by establishing a set of criteria. The chart below tracks how often firm ownership diversity fields, such as the percentage of firm equity owned by women, are used to screen products by our investor and consultant clients.
Firm ownership diversity screening continued to gain share as a criterion for finding suitable investment products. Fields such as “Total % Minority/Female Owned,” “% African-American Owned,” and “Description of ‘Other’ Minority/Female Owners” represented 5.2% of all screens utilized by U.S. consultant and investor clients of eVestment for the year through October-31-2020, up from 3.3% in the prior year. As a point of reference, returns data accounted for roughly 9% of all screens in 2019.
Firm Ownership Diversity Screening Activity
As a percentage of all U.S. investor and consultant screens, trailing 12 months.
The chart below indicates what client types are utilizing firm ownership diversity screens. Generally, consultants dominate in this regard accounting for 83% of such screens in the U.S. Among investors, public and corporate pension clients were the most likely to screen for asset managers based on diversity criteria.
Share of Firm Ownership Diversity Screening in the U.S.
Given public pensions’ relative interest in diverse firm ownership for their external managers, we used Market Lens to look at the number of public plan documents containing relevant keywords such as diversity, minority and women, by date of publication. These documents range from proxy voting policy to portfolio diversity reviews to RFPs specifically addressed toward minority- and women-owned firms.
The chart below shows a clear rise of diversity-related documents, almost tripling from 233 in Q3 2016 to 636 in Q3 2020. Updated counts do show a noticeable drop in diversity-related documents during the peak of COVID-19 uncertainty, followed by a recovery to new highs in Q3 2020.
Public Plan Documents with Diversity Keywords
While not all of these documents signal increased demand for investment management services from minority- and women-owned firms, we do not find it a stretch of the imagination to interpret the proliferation of documents, and discussions, to mean that diversity is increasingly on public plans’ radars.