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Diverse asset management study stymied by nonparticipation

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How diverse are the asset management firms managing the endowments of the 50 wealthiest U.S. colleges and universities? That’s a question the Knight Foundation set out to answer—but one that remains unclear, since 34 of the 50 wealthiest institutions aren’t willing to talk about it.

The research, which looks at the top 25 public and top 25 private universities, provides an incomplete picture, given the underwhelming participation of institutions. Four colleges self-reported data, leaving only 12 universities that provided asset manager rosters to the researchers.

But if an answer can be pulled from the limited data: their asset management firms are not very diverse at all.

The study, released Thursday as an interim report due to the lack of comprehensive data available, was a joint effort by the Knight Foundation and the New York University Stern Center for Business and Human Rights. It relied on research conducted by Global Economics Group, a business management consultancy.

Institutions that provided asset manager rosters include Princeton, Columbia, Duke, the University of Chicago, Vanderbilt, Rice, the University of Texas and University of California systems, Michigan State, the University of Illinois, the University of Colorado and Rutgers University

Unpacking the Study

Among the 16 universities that participated either partially or fully, there are significant differences in diversity. According to Stanford University, which self-reported data, 38 percent of its assets are under management with diverse firms—the highest reported figure of any institution in the study.

Duke University, which fully participated by sharing its asset management rosters with researchers, has 32.1 percent of assets in the hands of diverse firms.

On the opposite end of the spectrum, diverse-owned firms manage 6.6 percent of Rutgers University’s assets and 10.3 percent of Michigan State’s.

The report includes statements from some colleges explaining their commitment to diverse firms. Others opted to explain why they chose not to participate; their reasons include lack of personnel to gather the information and an inability to share proprietary information. Some offered no comment at all.

“Diversity, equity, and inclusion are core values at Stanford University. Stanford Management Company (SMC), a business unit of the University, is fully engaged in Stanford’s diversity initiatives and has its own [diversity, equity and inclusion] Action Plan that can be found on its website. SMC is committed to increasing diversity among its staff, expanding upon the existing diversity of the endowment portfolio, and contributing to diversity in the asset management industry,” Stanford said in a statement included in the Knight Foundation report.

Institutions with self-reported diversity statistics include Harvard, Stanford, the University of Pennsylvania and Dartmouth College.

Duke did not include a statement and did not respond to a request for comment.

“At Michigan State University (MSU) we believe that diversity, equity and inclusion must be upheld at all institutional levels,” read a statement included in the Knight Foundation report. “MSU Investment Office continuously seeks to identify a diverse pool of investment funds, however we do not select investment funds based on identity. MSU is bound by the Michigan Constitution as amended by the passage of Proposal 2 in 2006 and upheld by the U.S. Supreme Court in 2014, which prohibits Michigan public universities from providing preferential treatment to, discriminating against, or protecting any individual or group based on classifications in the operation of public employment, public education, or public contracting. Therefore, every academic and administrative unit at MSU must honor these principles; the MSU Investment Office is no exception. While Proposal 2 prevents discrimination and preferential treatment, it in no way negates our ongoing and fundamental commitment to DEI.”

Despite its low numbers, Rutgers pointed to the importance of DEI in its statement.

“Rutgers University is committed to developing a more diverse, equitable, and inclusive environment. The university recently released its first diversity strategic plan, which identifies concrete steps toward charting a more inclusive path forward that models excellence for the institution. Rutgers acknowledges that there are many factors, including ownership, that should be accounted for when assessing the diversity of our investment partners. Factors such as the composition of executive leadership and persons in investment decision-making roles, for example, are also critical evaluation components,” Rutgers said in the report. “Diversifying our portfolio improves when taking these considerations into account. An important component of advancing diversity in the investment management industry is accomplished through the recruitment, development, and retention of new professionals. We monitor the diversity of our partners at all levels of their organizations to understand how they evolve over time.”

A Lack of Transparency

Outside observers as well as those involved with the study criticized the lack of institutional participation, arguing that providing such data yields valuable investment insights.

“We know that a number of university leaders are working to identify and include high-performing diverse-owned firms to manage endowment funds. But the paucity of reliable data on the ownership of investment firms makes it all but impossible to accurately chart progress or to motivate reluctant schools to do more,” Michael Posner, director of the NYU Stern Center for Business and Human Rights, said in a news release accompanying the study.

Some observers were more pointed in their criticism.

“While this study shows signs of progress, it also illuminates how far we have to go. For one, 34 institutions, representing $273 billion in assets, declined to participate. It’s absurd that in 2022—when so many institutions have finally committed to transparency—such a large number of schools still refuse to report their diversity figures,” Robert Raben, executive director and founder of the Diverse Asset Managers Initiative, said in a news release addressing the interim report.

Raben noted by email that even for the colleges reporting the highest percentage of assets managed by diverse firms, there were still a lot of unanswered questions. Though institutions such as Stanford and Duke have strong diversity representation in this area “relative to the field,” he noted that “we have zero idea what’s behind that number. Is it all or mostly white women? Is it LGBTQ? South Asians? We know from other sources that the numbers for Black and Latino/a managers are vanishingly small, which is the core problem. So, first, the universities need to disaggregate the data so we can see exactly what’s going on.”

Asked about colleges on the other end of the spectrum that lack representation—such as Rutgers—Raben was critical.

“It’s typical, and terrible,” Raben wrote. “It likely means … that 93.4% of the entire endowment is managed by white men. In what sector is talent almost uniformly distributed only to white men? No field, and asset management’s vestigial exclusions of women and people of color is costing them returns. If you’re not working with all the talent, you’re missing out on returns.”

Though the Knight Foundation uncovered limited diversity among higher education asset management, insights from the National Association of College and University Business Officers offer a more positive outlook, noting that many colleges are crafting policies to address such concerns.

“Over the past two years, we have seen some slight increase in interest among colleges and universities for using diverse managers,” Ken Redd, senior director of research and policy analysis at NACUBO, wrote in an email. “From fiscal year 2020 to 2021, the share of institutions that said they have a policy of considering the hiring of investment managers owned by women or people of color grew from 5.8% to 7.7%, according to our NACUBO-TIAA Study of Endowment (NTSE) series. The growth was somewhat more noticeable at private colleges and universities, where the share with a policy of considering diverse firms grew from 6.8% to 10.2%.”

Long-term trends around diversity are unclear, Redd explained, since the survey question has only been included in the NACUBO-TIAA Study of Endowment series for the last two years.

Redd encourages institutions seeking to enhance diversity in asset management to engage their governing boards on the matter and get buy-in, update their investment strategies to include diversity goals, and consider bringing in outside consultants who have a strong sense of the landscape and can identify diverse firms.

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Only 16 of the top 50 wealthiest U.S. colleges participated in a study examining diversity of asset management firms across higher education.
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A ‘mental health overhaul’ for Cal State Long Beach

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Students on campus at Cal State Long Beach.

The COVID-19 pandemic only intensified Fidel Vasquez’s interest in mental health. A third-year student at California State University, Long Beach, Vasquez graduated high school in the spring of 2020 and started college—remotely—that fall.

“I wanted to be involved in mental health, in terms of just being a student during the pandemic,” Vasquez said. “I just didn’t feel like a university student, and I didn’t feel connected to my campus.”

Now Vasquez is playing a role in the university’s “mental health overhaul,” a new strategic plan titled “Healthy Living at the Beach” that includes more than 60 mental health initiatives to be implemented over the next three years.

Beth Lesen, vice president of student affairs and author of the plan, said each of the initiatives falls under one of five objectives: diversity and inclusion, building a community on and off campus, increasing awareness of mental health services, making mental health services more accessible, and using technology to reach students.

“It’s one of the largest, most ambitious and aggressive mental health initiatives I’ve found in higher education,” Lesen said. “In the beginning when I started putting this together and looking for models, I was really trying to find other campuses that were doing something on this scale so that I wouldn’t have to reinvent the wheel if someone else was doing something really impressive. And I didn’t find anything.”

Vasquez, a senator in the university’s student government, is part of a working group initiative set to launch next semester involving teams composed of an administrator and a student leader, plus either a mental health professional or a local community leader. Vasquez said leaders from other student organizations will also participate in the working groups.

Though the groups haven’t received their assignments yet, Vasquez expects his will focus on either improving the university’s counseling services or addressing the mental health needs of underserved communities on campus. The groups are slated to meet about twice a month, Vasquez said.

“I think the partnership that the university is doing right now with student government and campus leaders is a good sign,” Vasquez said. “And it’s a good indicator of how this initiative will hopefully be impactful. I think typically, when it comes to decision making, a lot of times students are left out in the dark, and they don’t know what goes on in those offices.”

Other action items include restructuring recruitment strategies to diversify the counseling center staff and creating more physical spaces on campus where students can feel comfortable sharing sensitive experiences.

The plan also aims to develop protocols to reach student identity groups and others impacted during national crises, as well as to establish community partnerships with local nonprofit organizations and resource centers.

Though the plan won’t be fully operational until 2025, Lesen said the university is already seeing results from pilot programs launched in the spring.

Among them: a text-based peer-to-peer mentor program offered last semester to 1,400 transfer students (out of a total enrollment of about 40,000 students), in which students reached out to peers during high-stress periods—such as midterms and finals—to check in.

According to data from Cal State Long Beach, the pilot featured 611 student connections and a response rate of 44 percent. The most frequently discussed topics were academic counseling and advising, financial aid and mental health counseling, and psychological services. Lesen said the texting service allowed transfer students to get answers to questions they might not have otherwise asked.

“These are people who did not choose to come forward and ask for help independently,” Lesen said. “But they were open to it when people came and found them. So that’s something we piloted where we had great success, and we’re expanding that pilot to all incoming students for the fall.”

In another pilot, the university launched a mobile crisis team composed of mental health practitioners to respond to psychiatric emergencies on campus. Typically college campuses require a campus police officer to respond in such cases, because they have the authority to initiate hospitalizations, Lesen said. But in the new Cal State Long Beach model, mental health professionals determined whether the student in distress needed to be hospitalized or simply referred for counseling.

“Any student would appreciate that, but particularly our communities of color really appreciate the idea of not having a psychiatric emergency responded to by a uniformed police officer,” Lesen said.

Associate vice president of health and wellness Damian Zavala, who oversees the mobile crisis team, wrote a grant proposal to the U.S. Substance Abuse and Mental Health Services Administration (SAMHSA) last year to get the program funded. In January, SAMHSA awarded the university $400,000 for the initiative.

“The thought behind it was that when our police department responds to crisis situations on campus with students or faculty or staff, they’re in uniform and they’re carrying a firearm,” Zavala said. “Even before a word is said, it just has a different optic. And so we wanted to create a team that could respond to those situations where trained clinicians come with a more trauma-informed, humanistic approach—not that the police can’t do that.”

Zavala said the mobile team is active now and is looking for additional staffing.

‘A Drop in Persistence’

Cal State Long Beach president Jane Close Conoley noted that even before the pandemic, the university was on track to add more counseling and mental health resources—but the pandemic underscored how urgent the need was.

“[During the pandemic] is the first time I’ve heard faculty talk about students just not showing up and not turning in assignments and feeling disengaged and alienated from their work,” Conoley said. “For the first time in my eight years, we had a drop in persistence. From first semester to second semester, we weren’t able to develop that sense of belonging. And without peer support and interaction, I think students—a larger number than typical for us—really just gave up and didn’t come back. So we can see that the pandemic really had effects on our students that really threaten their future.”

According to an enrollment survey of about 3,900 students in spring 2022, 2,069 said they were taking fewer than 15 credits to preserve their own well-being. For the upcoming fall semester, 1,328 students expect to take fewer than 15 credits.

Conoley said the most important part of Cal State Long Beach’s mental health plan is getting all 60-plus initiatives integrated and operational as soon as possible.

“I think certainly the biggest impact comes from getting all the pieces in place, and we will be working on this,” Conoley said. “There’s lots of programs all over the campus, but we haven’t tied them together. So that’s going to be a big deal when we understand that we have this clinic over here, and we have this program over here, and we try to pull it together.”

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Cal State Long Beach is launching an ambitious plan to improve student mental health, which suffered during the COVID-19 pandemic.
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Colleges award tenure

Kalamazoo College

  • Christina Carroll, history
  • Francisco Villegas, sociology
  • David Wilson, physics

Ohio University

  • Jonathan Agensky, political science
  • Nicholas Allan, psychology
  • Sabrina Curran, sociology and anthropology
  • Yaqin Feng, mathematics
  • Adam Fuller, mathematics
  • Joseph Johnson, biological sciences
  • Victoria Lee, history
  • Amy Lynch, geography
  • Daniel Moak, African American studies
  • Cortney Rodet, economics
  • Myrna Sheldon, classics and religious studies
  • Rebecca Snell, environmental and plant biology
  • Kirstine Taylor, political science
  • Anna Terman, sociology and anthropology
  • Nathan Weyand, biological sciences
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