Stanford creates initiative to augment existing efforts to invest with diverse asset managers
The Stanford Board of Trustees has approved an allocation of university reserve funds for a new program to invest in diverse asset managers. The program builds on the experience that Stanford has had in backing diverse-led investment firms in its endowment, more than a third of which is placed with diverse-led managers, and creates new avenues for such firms to enter institutional investment portfolios.
In the newly created Diverse Manager Initiative, Stanford will allocate capital to diverse-led investment firms with a strong potential for outperformance, but that may not yet be a fit for many large institutional portfolios due to factors such as scale or length of track record.
Stanford Management Company (SMC) – which invests the university’s endowment and other financial assets to provide long-term support to the university – developed the new initiative and recommended it to the trustees, building on SMC’s ongoing diversity efforts, as outlined in SMC’s Diversity, Equity and Inclusion Action Plan.
“Diverse investment managers have made major contributions to Stanford’s endowment performance,” said SMC Chief Executive Officer Robert Wallace. “This new initiative will further expand our sourcing efforts and help grow the diverse talent base of the industry.”
Diverse professionals have limited representation in the asset management industry overall. Studies by the Knight Foundation indicate that, in the United States, 12.2 percent of asset management firms are majority-owned or cofounded by women and minorities and manage 1.4 percent of total industry assets. For the active U.S. portfolio in the Stanford endowment, these numbers are 33 percent and 37 percent, respectively.
The initiative will be managed by SMC and advised by a committee chaired by Sandra A. Urie, a former SMC board member and Stanford graduate. She is also chairman emeritus and former CEO, chairman and COO of Cambridge Associates. The committee includes José E. Feliciano, Miriam Rivera, Elizabeth “Bess” Weatherman and Charles D. Young, all of whom are current or former Stanford trustees and have been active in advancing diversity in the investment industry.
Managing Director of Special Programs Greg Milani will lead SMC’s effort to identify, evaluate, hire and monitor investment partners. Milani is the former senior managing director of SMC and a member of the Stanford Graduate School of Business Latino Alumni Chapter.
At the outset, the fund will invest in up to 10 diverse-led investment firms based in the U.S. “We will be looking for talented diverse-led partners whom we expect to deliver exceptional long-term performance,” Milani said. “We hope that over time these firms will develop into partners for many institutional investors.”
“I’m pleased that the trustees have approved this plan that will help further advance diversity in our own endowment portfolio and in the industry overall, and I am thrilled that Sandy Urie and the other advisors will assist us in this effort,” said Stanford President Marc Tessier-Lavigne. “The new fund will complement the university’s broader efforts to advance diversity, equity and inclusion through our IDEAL initiative.”