Diverse Investment Manager Community Speaks Out As Demonstrations Continue
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Vol. XV, Issue 6
The Trusted Source for Emerging Managers June 2020
Source: AFP
Diverse Investment Manager Community
Speaks Out As Demonstrations Continue
Across the investment industry, investment professionals and “It is just not true. These decisions are being made to em-
organizations are speaking out about inclusivity and racism in power the same people over and over again and what we are
the country and the asset management industry following the trying to do is break that cycle and try and create opportunities
killing of George Floyd. and to do it in a way that is sustainable,” he added.
Floyd, who is black, was killed by a white police officer on The John S. & James L. Knight Foundation has spearhead-
May 25, sparking protests across the country. ed research that shows the structural inequity in investment
Les Bond, ceo of emerging manager-of-managers Attucks management, finding that women- and minority-owned asset
Asset Management, said without the video footage of Floyd managers handle only around 1% of the industry’s $70 trillion
being restrained by the white police officer for nearly nine in total assets under management and that the top 50 nation-
minutes with his knee on his neck, there would continue to be al foundations have 13.5% of their assets with diverse-owned
assertions that these issues do not exist. In looking at the in- firms.
vestment space, those same issues exist. “Investing with diverse-owned firms is a way to address
“Unfortunately, we don’t have people wearing body cams structural inequity without compromising performance,” said
into investment decision meetings because it does happen Juan Martinez, v.p., cfo and treasurer of the foundation, in a
and there is no way you can explain the disparity of oppor- statement.
tunities for minorities and women in this industry except for Matthew Wright, founder and cio of outsourced cio Disci-
racial preferences and the racism that we see in our industry,” plina Group, said one aspect of investing in diverse managers is
he said, arguing against the common assertion that investment
decisions are based solely on merit. See PROTESTS, Page 4
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$100,000 per infringement. For photocopy permission, back issues and bulk distribution needs, please contact Matthew McCue at 646-810-1075 or e-mail mmccue@fin-news.com.
I
OCIO Enhances Diverse Manager Research ► p. 10-11
NSIDE Fairview Study Shows Opportunities In PE, VC ► p. 19
THIS Calif. Health Care Foundation Seeks To Drive Diversity ► p. 22
SSUE A Look At How Clients Transitioned From Progress ► p. 23
Texas A&M Foundation Names CIO ► p. 25
Lenox Park Creates “FICO Score” For Diversity & Inclusion
◄ p.7
Siris Co-Founder Gives Back, Reflects On Help
◄ p. 9
Aubrey Remains Bullish On U.S. Investors
◄ p. 17
Varuna Looks To Reel In Sustainable Seafood Investors
◄ p. 20
Varuna Capital LLC
www.varunacapital.com
+1 (858) 752-2803
From The Editor
EDITORIAL
MANAGING EDITOR | MATTHEW MCCUE
mmccue@fin-news.com | 646-810-1075
I ’m not going to pretend to understand, because I
don’t.
I’m not going to act like I’ve been in the same
situation, because I haven’t.
EDITOR | ZACK CZIRYAK But I do know we all need to work together to
zack@fin-news.com | 646-738-7337 make real, actual changes to how people of color are
treated in this country.
ASSOCIATE EDITOR | COLIN RAJALA The death of George Floyd has awoken the voice inside many of us that
colin@fin-news.com | 646-738-7336 has remained silent for too long. The actions of Amy Cooper, head of insur-
ance investment at Franklin Templeton Investments before her firing, are a
REPORTER | LINDSAY SAIENNI symptom of the problem at hand and serve as an example of the racism and
lindsay@fin-news.com | 646-738-7945 bias that continues to exist in our country and within our industry.
As the saying goes, one whisper, added to a thousand others, becomes a
REPORTER | JUSTIN SLAUGHTER roar of discontent.
justin@fin-news.com | 646-738-7943 I’d be delusional to think that this publication is going to change the
world or convince all investors that diverse managers deserve a place in their
REPORTER | DANIELLE CORREA investment portfolio. But we won’t stop working to support the inclusion of
danielle@fin-news.com | 646-738-7947 diverse asset managers in this industry.
I had a recent exchange with a black man in our industry who wisely
ASSOCIATE REPORTER | LAUREN ALBANESE told me “it’s up to the folks like us, to come together with some practical and
lauren@fin-news.com | 646-810-1074 intentional solutions; a path that can actually lead to progress in addressing
the underlying issue. And the solutions have to be big enough to match the
ASSOCIATE REPORTER | TEDDY HAINES problem.”
teddy@fin-news.com | 646-738-7948 There isn’t one solution that solves this problem, but the success of
black asset managers in building and sustaining firms is a critical component
RESEARCH on many levels. It not only creates further wealth but also jobs, improves
philanthropy and changes the image that too many have of minorities in this
DIRECTOR OF RESEARCH | GAR CHUNG country.
gchung@fin-news.com | 646-810-1073 One example of that type of success is Frank Baker, founder and manag-
ing partner of private equity firm Siris, who recently announced a $1 million
SENIOR RESEARCH ANALYST | PAMELA COX gift toward the establishment of a scholarship for Spelman College gradu-
ates that will initially pay for the existing spring tuition balances of nearly
SENIOR RESEARCH ANALYST | RONAN O’BRIEN 50 members of the college’s 2020 graduating class and thereafter provide
support to ensure that future high achieving graduating seniors have the
SENIOR RESEARCH ANALYST | JABEZ GRANT financial resources to graduate. Check out his profile inside this issue.
Others are doing work to put real numbers behind the diversity initia-
tives of allocators and managers. Inside, we highlight a new “FICO Score” for
SALES & MARKETING asset managers put together by Lenox Park Solutions that aims to establish a
standardized metric to assess diversity, equity and inclusion in a comparable
SALES MANAGER | VICTORIA DORAGE format across firms.
vdorage@fin-news.com | 646-738-7339 The continued growth of the diverse asset manager space is just one
way we can provide an opportunity to improve the inequities that exist
OPERATIONS MANAGER | ROB REGAN across our country. Now is the time for allocators to be intentional and
rob@fin-news.com | 212-627-7615 transparent in their actions. Show what you are doing, be proud of it and
promote it for others to see. Be the leaders that our industry needs, that
ACCOUNT MANAGER | JOSH JENKINS America needs.
josh@fin-news.com | 646-738-7944 This is not a quick fix. It takes all of us—of all colors—to begin the long
journey to creating the America that has been derailed on its path to equality.
Financial Investment News We need to reach one thousand roars. Maybe that will start leading to
15 West 26th Street, 4th Floor changes.
New York, NY 10010 Matthew McCue
www.emergingmanagermonthly.com Editor
Emerging Manager Monthly, June 2020 3
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PROTESTS: Diverse Manager Space Offers Opportunities For Communities
Continued From Page 1
It is up to each of us to determine whether we want our children to grow up
with disappointment or hope that things can change. It is up to each of us,
and specifically those who benefit the most from racism, to end it.
the impact element and how achieving further diversity across Bancroft said he had to explain to his 17-year-old son,
industries creates more robust micro economies in areas such 15-year-old daughter and 10-year-old boy that “in America,
as philanthropy, family support, educational achievement and ‘life, liberty and the pursuit of happiness’ comes with a tax for
health and wellness, among others. people of color, and at any moment that tax can be levied with
“Just in my thoughts alone, regardless of the scale, just by deadly force.”
making the investment into emerging managers you do expand “Samuel Huntington wrote ‘America is not a lie; it is a dis-
the opportunity to address a number of social ills that tend to appointment’ and I have to believe that, because you can change
be basically concentrated in certain diverse groups,” he said. disappointment, but you cannot change a lie. It is up to each of
The current situation requires people of varying communi- us to determine whether we want our children to grow up with
ties to acknowledge and recognize prior injustices, Wright said. disappointment or the hope that things can change. It is up to
“It is important for people to migrate from people being each of us, and specifically those who benefit the most from
overly sensitive and getting their feelings hurt to the reality racism, to end it,” Bancroft said.
of true injustices. I think the next iteration is really going to Angela Matheny, director
require not just lip service in terms of support but a conscious of investment staff and diverse
awareness of our decisions and the implications of those deci- manager equity at investment
sions and how sometimes those decisions can be far reaching,” consulting firm Colonial Con-
he said. sulting, said “it is no longer good
Lawrence Bancroft, found- enough to just not be racist,” in
er and ceo of emerging manag- talking about how to address the
er-of-managers Bivium Capital issues.
Partners, believes Floyd’s mur- Colonial, which has been
der does not have to be in vain if one of the more proactive and
it is used for growth and change. transparent consultants with re-
“I am encouraged by the gards to identifying and invest-
work that we are doing in finding ing with diverse managers has Angela Matheny
opportunities for highly quali- had further discussions in re-
fied women and people of color cent days on how it can be more intentional in finding more di-
to help build this industry and verse managers as well as becoming a louder voice in the public
country into what it can be,” he domain, Matheny said.
said. Lawrence Bancroft Michael Miller, cio of Colonial, said following a company
He recommended three ac- meeting this week that it was striking to hear the universal na-
tions to further that aim: individuals educating themselves on ture of the bias that each of the firm’s minority employees had
the vast complexities of racism and white privilege; ceos utiliz- been subjected to.
ing the most effective diversity and inclusion practices to hire, “It was also good to hear how manager diversity has pro-
train and promote women and professionals of color; and lastly, vided a source of pride and purpose. We have the privilege and
each citizen should, in his or her own way, “commit to disman- responsibility of influencing the deployment of tens of billions
tling this nationwide system of hatred and oppression, which is of dollars—money alone solves nothing but when it is directed
both overt and covert, ad hoc and institutionalized, physical- in a purposeful manner, it can be a catalyst for real change.
ly violent and economically violent, local and global. Wheth- Just as the forces of bias and inequity have systematically and
er you choose police reform, criminal justice reform, housing persistently brought us to this place, we can do the same but in
discrimination, banking discrimination, environmental racism, the service of equality and the just and safe place that should
employment discrimination, etc., select one and work diligently simply be,” he said in a message to employees.
to ensure that America and our industry become the place of
freedom we all want our children to live and thrive in.” Continued On Next Page
Emerging Manager Monthly, June 2020 4
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PROTESTS: Managers Discuss Frustrations, Obligation To Fix Racial Injustices
Continued From Previous Page
Tina Byles Williams, found- ciety immediately, but we can each contribute the love and un-
er and cio of manager-of-man- derstanding in our hearts and in our souls to our families and our
agers Xponance, is the moth- communities. Take the time to reach out to the communities that
er of two sons and also has a are grieving most, and let them know that you support them and
grandson. She talked about her we are one,” he wrote in the letter, which was first obtained by
feelings of frustration. the New York Times.
“It is personal and it is pro- Industry organizations also expressed their views.
fessional for me. You weigh the The Toigo Foundation highlighted its 30 years of helping mi-
professional implications [of norities working in the investment and finance industry in a June
speaking out] but I assure the 1 letter from the organization’s leadership.
professional implications pale “We view our work as an essential move toward financial eq-
in the light of the maternal con- uity and inclusion, as well as a step to dispel the myth that mi-
cerns,” she said, adding that “ev- Tina Byles Williams nority talent does not exist,” the letter states.
erybody has an obligation to fix “Now is the time for all of us, together, to appropriately
this.” address the pervasive, systemic and institutional racism in our
She has published an open letter on the issue that is available country. We cannot allow it to go unnamed and unchecked. To-
on the firm’s website. gether, we must dismantle the overt and covert structures and
Harlem Capital, which recently announced the closing of practices that make a mockery of every well-meaning corporate
its first fund with more than $40 million in capital that included policy promoting diversity and inclusion,” the letter later said.
commitments from investors like TPG, the State of Michigan Re- SEO President and CEO William Goodloe said people must
tirement Systems, Vanderbilt University, the Harry and Jeanette stand together as a community in fighting systemic racism and
Weinberg Foundation and the W.K. Kellogg Foundation, issued a injustice everywhere in a statement sent out on June 1.
statement on LinkedIn on June 2. “The blatant disregard for the value of Black lives is evidenced
“It is standard in business to wait until you have ‘made it’ to by an education system that is consigning millions of Black chil-
start speaking out on issues, but this standard significantly slows dren to a woefully inadequate K-12 public education system. A
down progress on our big-
gest challenges. There is
no time to waste,” Jarrid
Tingle, managing partner
The optimist in me says this is different
at the firm, wrote in a post
preceding the statement.
and encouraging. The realist in me and the historian
“Words can be mean-
ingful, but actions speak
in me says this has happened before. I am going
louder. Actions like texting
a Black colleague, educat-
to hold onto the optimistic interpretation.
ing yourself and your net-
work, speaking up publicly,
voting in elections, and voting with your dollars are the start of system that leaves them under-educated and unequipped for ful-
meaningful change. As a firm with a mission focused on increas- filling adult lives, multiplying the probability of (continued) pov-
ing access for minorities and women, we continue to focus on erty, or even incarceration, as adults,” he wrote. “The SEO Family
economic empowerment and using our energy to make the world is filled with grief, while simultaneously ignited by the ever-im-
a more equitable place. We cannot achieve this mission alone and portance of our mission to close the opportunity gap and propel
will need your support to help uplift our communities,” the firm people of color into positions of leadership and influence – creat-
said. ing a more equitable, just, and democratic society.”
Robert Smith, founder of private equity firm Vista Equity How the protests continue to play out and the impact on
Partners and the richest black man in America, called it a “heart- the racial divide in America will not be known for some time, but
breaking and painful week for America and a reminder that in most believe progress can be made.
our endless pursuit of a ‘more perfect union,’ a great deal of work “The optimist in me says this is different and encouraging.
remains,” in a letter to employees that also reflected on his expe- The realist in me and the historian in me says this has happened
riences as a youth. before. I am going to hold onto the optimistic interpretation,”
“We may not be able to mend all the broken parts of our so- Byles Williams said.
Emerging Manager Monthly, June 2020 5
PRAY FOR AMERICA
LET'S STOP INCOME INEQUALITY NOW!
ggarcia@garciahamiltonassociates.com For more information, please contact:
www.facebook.com/gilbert.andrew.garcia Ruby Muñoz Dang
www.twitter.com/Gilbert_Garcia_ 713-853-2359
www.instagram.com/gilbertandrewgarcia Ruby@GarciaHamiltonAssociates.com
www.linkedin.com/in/rubymunozdang/ www.garciahamiltonassociates.com
*Data as May 31, 2020
Awards/rankings may not represent client experiences and are not indicative of future performance.
Go to www.garciahamiltonassociates.com/awards/ for additional information on each award.
offering statistics across multiple categories, including reported firm data within RoundTables, which currently has
Asset Class, AUM, Firm Size, Geographic Region, and sub- approximately 300,000 data units on DEI.
categories of gender and ethnicity that reveal relative
performance in selected peer sets As detailed below in Figure 3, LPI is currently comprised of 10
News Features Columns Marketing Alternatives Searches
components, each of which are Industry
awarded sub-scores between
§ Expand the Pool of Asset Managers that contribute to DEI 0.00 and 1.00. Firms are then assessed a final score that ranges
by ‘Impact-Weighting’ allocator portfolios, and tracking the from 0.00 to 10.00 based on a comprehensive set of diversity
Lenox
amountPark
of capitalCreates Standardized
that has DEI impact as a percent of totalMetric To Assess Diversity & Inclusion
data.
allocations to asset managers over time
Lenox Park Solutions has created a “FICO Score” for asset manag-
ers
Lenox
Figure 3Park Diversity Impact Score Components
: LPI Components
§ that
Provassesses
ide a diversity,
Transpareequity
nt Roand adminclusion
ap within the investment
a scoring
management industry.
methodology that all firms (not just those with diverse Women in Workforce
The Lenox Park Diversity Impact Score is a standardized met- % POC Ownership
ownership) can reference to improve, participate in, and be 10%
ric that assesses diversity, equity and inclusion in a comparable 10%
POC: Ownership
formatheldacross
accountable for around
a wide range theiradvancing
of firms, DEI effortsbeyond ownership Women in 30%
percentages to a more comprehensive assessment that also incor- Leadership # of POC Owners
10% 10%
Weporates firm leadership
are pleased with the dataandgravity
total workforce data,
taking place in said Jason Lamin,
RoundTables
founder and ceo of the firm. Gender POC
as the book of record for DEI, and we want to encourage the 50% 50%
“The overall agenda is to promote a more advanced and sus-
Duration of Women
Industry to continue contributing data from their own
tainable approach to measuring the impact of dollars allocated firms and Ownership
Duration of POC
Ownership
their investments.
across the asset management industry and across asset classes, 10% 10%
with respect to diversity, equity and inclusion—and not just for di- # of Women Owners POC in Leadership
versely owned firms, but all asset managers,” he said. 10% 10%
Scoring Methodology
The scores were developed using data from the firm’s Round-
Gender:
Ownership
% Woman
POC in Workforce
Ownership
10%
ToTables
develop LPI, we
platform started with
in concert by using
a Ph. advanced tools in ourteam
D level econometrics 30% 10%
and looks at ownership,
RoundTables platform toleadership
aggregateanddata,
total and
workforce across gen-
then applied
der and ethnic diversity. The score is currently comprised of 10
statistically rigorous analysis and vast amounts of expertise and
components, each of which are awarded sub-scores between 0.00 Gender Ethnic
context from a broad network of institutional stakeholders.
and 1.00, with firms assessed final scores that range from 0.00 to It was D iver sity Diversity Total
imperative
10.00. that we establish a robust scoring methodology that Ownership 30% 30% 60%
The RoundTables
was sound today, but that platform currently
would also evolverepresents
as we add$945morebillion
DEI in Leadership 10% 10% 20%
limited partner assets under management with 1,300 users from Total Workforce 10% 10% 20%
components. We expect the components to become more
750 organizations, with more than 500 investment managers across Total 50% 50% 100%
expansive
asset classesas data
also becomes
included. more readily available, and as the
Laminwithin
definitions said DEI
thatbecome
beyondmorecreating a standardized
encompassing. Today,metric,
LPI is the
scores aim to open up the metrics to non-diverse
calculated using gender and ethnic diversity data for firm owned managers hasOwsignificant
nership Cimpact ontribuontionthes overall industry.”
in order to welcome and reward all firms for their diversity and Lamin said that Lenox Park’s subscribing clients can request
Ownership, Leadership, and Total Workforce. At 60% of the final LPI score (Figure 3), diverse Ownership
inclusion efforts and provide allocators with broader insights and the data from managers, however, the scores are not published
accountability measures. comprises
without the greatest
a manager’s consent.proportion of LPI compared to diverse
2: Current
Figure“One & Future Components of LPI
of the things I am excited about is finally, for the LPs that For managers,
Leadership or Totalonce invited onto
Workforce. Andthe
forplatform,
good reason: they can provide
Ownership
are serious about this, there is now a way to measure progress,” he their information and see their score at no cost. They also have the
is still an undeniably strong indicator of how firms perform in
said, adding that the scores “encourage the investment profession- ability to subscribe for a fee to see their scores alongside industry
als to consider the impact of every dollar that goes out the door.”
hiring and promoting Women and POC. In the RoundTables LPI
benchmarks and see how they stack up in specific groups segment-
“To be clear, diverse ownership is still an extremely important edUniverse, by assets under we see that firmsasset
management, scoring
class,ingeographic
the top region decile and for
indicator of a firm’s culture of inclusion, and the weightings of our size of workforce.
Ownership also scored 1.8x better than the remaining firms on
score reflect that. The data also tells us, however, that some firms “No matter where you are with your score, there is always
Leadership and Total Workforce diversity. Despite some of its
that are not diversely owned are also making an impact on diver- an area to improve, and sometimes very specific challenges are
shortcomings as a standalone metric, percentage of diverse
sity, equity and inclusion. Our data shows a cohort of roughly 35 brought to light,” he said.
or 40 firms out of approximately 500, that even though they are Ownership
The scores stillalso
remains
are not a key indicator
meant for assessing
to restrict allocators diversity.
from in-
not diversely owned—so they will never be qualified or certified as vesting in firms with lower scores, but instead allow them to work
MWBE—those same 35 or 40 firms are performing in the top quar- with firms to provide a roadmap for how to improve, according to
tile in terms of diverse leadership and diverse workforce and they Lamin.
employ tens of thousands of women and people of color,” Lamin The scores will also evolve over time as additional components
said. and factors are added in to paint a complete and accurate picture
The scores are also designed to incentivize firms outside of of a diverse and inclusive culture. Some areas where data are al-
ownership—particularly at larger firms. ready being aggregated is LGBTQ, veteran or disability status, first
“If you are Blackstone, you can’t do much about your owner- or second generation immigrants and portfolio company diversity
ship, but you can still do a lot with your leadership and your total for private markets firms.
workforce,” Lamin said, for example. “Any encouragement that Pagewe3 of 11 “If you really want to do something about this, start measuring
can give them to hire, retain and promote women, people of color and assessing the managers in your portfolio today with respective
and other underrepresented groups is meaningful progress, and to diversity, equity and inclusion,” he added.
Emerging Manager Monthly, June 2020 7
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NEWS
BRIEFS
► Callan CEO and Chief Research Officer Greg Allen has
joined a coalition of ceos pledging to take action to advance
diversity and inclusion in the workplace.
The CEO Action for Diversity & Inclusion coalition is
currently made up of more than 900 ceos.
IMAGINE YOUR “We are proud to become signatories in this unique col-
lective,” Allen said, in a statement. “It is important for us and
our industry to ultimately reflect the diversity of the com-
ADVERTISEMENT munities that we serve. We are mindful that this is an evolu-
tionary process, and that it requires thoughtful and proactive
attention.”
HERE Currently, 52% of Callan’s management team and 57% of
its employees are female and/or diverse, the firm said. The
firm has also run its Callan Connects program, which engages
with emerging and women-, minority- and disabled-owned
managers, since 2010.
Further information on CEO Action is available on the
Click here for pricing organization’s website.
► Chrissie Chen Pariso, senior portfolio manager for private
or contact Rob Regan equity and head of the women and minority manager pro-
gram at Exelon Corporation, has left the plan.
at rob@fin-news.com There has not been a determination about who will take
over her responsibilities for the women and minority manager
program at this time, but “the program will of course continue,”
to request a quote. Drew Ierardi, head of private markets at the company, said.
Pariso joined Resan Partners as a managing director last
month, according to her LinkedIn profile. She did not immedi-
ately respond to a message seeking further details on her new
role.
She joined Exelon in November 2012.
► The Investment Diversity Exchange has begun a new
web series that offers brief discussions with allocators from
across the globe.
Already released TIDE Ten episodes include discussions
with Andrew Junkin, former president of Wilshire Consulting,
Brian O’Neil, cio of the Robert Wood Johnson Foundation,
and Steve Yoon, investment officer at the Municipal Employ-
ees’ Annuity and Benefit Fund of Chicago.
The next episode will feature Dennis Chu, an investment
committee member at the Ford Family Foundation.
The episodes are available on TIDE’s YouTube channel.
Emerging Manager Monthly, June 2020 8
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A Little Help Goes A Long Way For Baker
Siris Co-Founder Looks To Help Next Generation
Frank Baker has seen how far a little bit of neapolis, which are heartbreaking,” he said.
help can go. Baker’s discussions with Spelman be-
From taking part in an SEO program gan after Vista Equity Partners Founder
that led to his first job on Wall Street to Robert Smith announced he would pay off
finding traction for his fledgling private the student loan debt of the 2019 graduat-
equity firm through emerging manager ing class at Morehouse College.
programs, “when I think about the success “Robert’s gift, which inspired me, was
I have had in my career, there is an element clearly a gift as well as a challenge. To the
of ‘a little bit of help’,” the co-founder of Morehouse graduating seniors last year,
Siris said. the gift was paying off their college debt.
Now he is making the effort to offer a The challenge to them was to ensure that
little bit of help to the next generation. they, when in a position to do so, would
Baker and his wife Laura Day Baker re- also give back. He also challenged the
cently announced a new $1 million schol- Morehouse alumni to think about what
arship with Spelman College that will ini- they could do to support their own com-
tially pay existing spring tuition balances munity,” he said.
of nearly 50 women in the 2020 graduating Through his discussions with Spelman
class and thereafter is committed to sup- President Mary Schmidt Campbell, trust-
porting the next three classes to ensure ees and students, the conversations ze-
seniors have the financial resources to roed in on what was forcing them to leave
graduate. without their degrees, with many of them
Baker said he and his wife have tended citing money as the biggest issue. “ It was Frank Baker
to focus their support on education. very troubling to me that, after four years
“When you look at our world of haves of hard work, these talented young women “That first close really put us in busi-
and have nots, the biggest distinguish- would not be able to graduate just because ness and allowed us to start deploying
ing factor is did you graduate from high they owed a few thousand dollars,” Baker capital, gradually proving to the broader
school, did you graduate from college and said. LP market that we were capable investors.
are you able to go on and have a productive While Baker is nowhere near the finish We went on to close on $641 million in that
career thereafter,” Baker explained. line of his career, the start involved a sum- fund, and the emerging manager programs
The support that has helped Baker rise mer program with Goldman Sachs through were critical in helping us get there,” Baker
to where he is today is also synonymous SEO that turned into a full-time job in the said.
with how he views the steps that will bring firm’s mergers and acquisitions group in That success translated into a $1.8 bil-
America to a place of greater quality and 1994. Eventually, he joined private equity lion second fund raised in 2015.
equal access to justice that the killing of firm Ripplewood Holdings and ultimately “Almost all of the demand for our sec-
George Floyd has amplified. in 2007 started Siris with Peter Berger and ond institutional fund came from LPs who
“Obviously, I am profoundly affected Jeffrey Hendren. had moved us from the ‘emerging’ program
by it, but it just inspires me to work harder The firm began raising its first tradi- to the ‘core’ program,” Baker explained.
and do more, because of the magnitude of tional institutional fund in 2010. Fast forward to today, and Siris is currently
the change that is required. I believe that “We were a classic emerging manag- deploying its most recent fund of $3.45 bil-
many micro changes will be required to er. We were minority controlled, we were lion in commitments.
help facilitate that change. It’s an incre- raising our first institutional fund, we were Baker’s successes along his path show
mental 50 girls graduating from Spelman targeting $400 million. We checked a lot the importance of helping the community
College and entering the workforce, it’s an of the boxes for the dedicated emerging and he hopes his most recent donation will
incremental afterschool program in math- manager programs. We held our first close be that little bit of help that spurs those
ematics that inspires a young 8th grade in September 2011 on $120 million, and al- Spelman women to be impacted in the
class to enter high school with a lot more most all of that capital came through LPs’ same way.
confidence. It’s all of these little pieces of emerging manager programs,” Baker said. “Hopefully that inspires them to give
a complicated puzzle that can be put to- That initial support gave the firm the back when it is their turn, and that is how
gether to solve the problem. And until it is assets it needed to catch the eye of other this virtuous cycle starts to repeat and
solved, you see issues like we had in Min- investors. build off of itself,” he said.
Emerging Manager Monthly, June 2020 9
News Features Columns Marketing Alternatives Searches Industry
Dedicated Origination Team, Editor’s Note: This story originally appeared in
Nonprofit News on May 21.
Partnership Crucial To Diverse
Investing: Outsourced CIO
Outsourced cio Global Endowment Management has stepped up tional investment space.
its diverse manager sourcing and investing through a dedicated Having a dedicated orig-
origination team and a new partnership with the National Asso- ination team has allowed the
ciation of Investment Companies, an association of more than firm to build upon its commit-
80 diverse- and women-owned private equity firms and hedge ment to diverse and impact in-
funds. vesting, which has been a part
The firm’s initiative to improve its diverse and impact man- of the GEM model since its
ager sourcing came about largely by asking themselves the founding in 2007.
same questions they ask their managers, according to Director There are “excellent, di-
of Investment Sourcing Sam Cannon, who oversees the private verse managers out there, but
investment origination group out of the firm’s Charlotte, N.C. regardless of whether they are
office. well-known or not, many face
“We’ve always asked managers what their edge is in sourc- significant barriers to getting Sam Cannon
ing. In 2014, we turned that question on ourselves, and we didn’t access to and/or securing
have an exceptional answer,” said Cannon, who joined in 2012. commitments from endowment investors,” Cannon said.
As a result, the firm “undertook a year-long project to learn Partly because of the barriers to entry, the firm decided
what the best GPs do, and one differentiator the firm identi- early last year that it was not engaging with enough diverse
fied was that many of the best GPs have a dedicated origination managers and that it should be more proactive in its efforts, so
group,” Cannon said. it started a search for organizations that provide opportunities
In 2016, he helped build out GEM’s dedicated manager to engage with more diverse investment firms.
sourcing and investment origination practice. “What we found was that our pipeline did not represent the
“I came back to firm leadership with a roadmap to hire a universe of a diverse slate of managers. Why? We weren’t ac-
head of origination to lead a dedicated investment sourcing cessing channels that other people were. We needed to take a
team. I had no idea they would turn that on me. But they asked more proactive approach,” he said.
if I would take the role,” he said. As a result, GEM began speaking with the National Associa-
GEM’s private investment practice is currently comprised tion of Investment Companies—one of the country’s largest net-
of 10 professionals and divided by private equity and real assets, works of diverse hedge funds and private equity firms—before
with the origination group sourcing and qualifying opportuni- extending a dinner invitation.
“Our first dinner
meeting was fantastic.
We’ve always asked managers what their edge is in They were willing to col-
laborate on managers
sourcing ... We turned that question on ourselves, and we have in the portfolio,
and we were impressed
we didn’t have an exceptional answer. by the organization’s
meaningful relation-
ships with a large num-
ber of diverse manag-
ties for both asset classes. ers,” Cannon said.
Cannon finds that a dedicated origination team improves The Washington, D.C.-based association is not just finding
efficiency by dedicating one team to origination and others to investment managers but helping the firms access capital, he
the time-consuming duties of negotiating legal issues and ad- said.
vanced due diligence. “NAIC has been supporting these types of diverse manager
“What you see on a typical team is everybody does every- networks for a long time, giving them an early advantage com-
thing. The issue with that model is that if the team finds a good pared to groups that are beginning this type of work more re-
investment opportunity, they dive deep into diligence, which cently,” according to Cannon.
can take three to six months, and when they come up for air, Founded in 1971, the association has built an organization
their pipeline is empty. We don’t ever want that to happen. The with more than 80 member firms and is focused on access to
key is to be sourcing constantly,” Cannon said, noting that he
believes the dedicated origination team is unique in the institu- Continued On Next Page
Emerging Manager Monthly, June 2020 10News Features Columns Marketing Alternatives Searches Industry
GEM: OCIO Teams With NAIC To Build Out Diverse Manager Research
Continued From Previous Page
capital, improving the performance of their portfolio companies In addition to seeking out the best managers through the
and generating a successful exit or capital return to the limited NAIC partnership and elsewhere, GEM’s commitment to diversi-
partners, President and CEO Robert L. Greene said. ty includes a robust impact investing program, including invest-
“As far as building the network, the legacy and history play ments in renewable energy, funds investing in diverse entrepre-
a role, but people are attracted to us because our programs and neurs, healthcare-focused funds and affordable housing.
services are good for business,” Greene said. Many of the firm’s clients are looking to generate positive
The association has a suite of programs to assist GEM and social or environmental impact with comparable returns to
all of its members grow the value of their business, particularly more traditional investments, Cannon noted.
research programs that identify LPs looking to invest, diverse “Clients say they aren’t willing to sacrifice returns, and we
members in private equity that are actively raising capital and don’t believe they have to,” he said.
the investment performance of diverse private equity managers. Impact investing requires understanding an investment’s
That performance research has demonstrated that diverse social or environmental impact on all stakeholders and GEM an-
private equity managers have outperformed the market over the alyzes its portfolio using a leading impact measurement frame-
last fifteen years, he noted. work, called the Impact Management Project, which measures
“Those programs add value, and then members refer us to the impact of portfolio companies on key stakeholders and each
other members, so the value created at the center radiates out- investment manager’s contribution to impact, Cannon explained.
wards,” he said. “Our ecosystem is alive and growing because we GEM’s portfolio impact map shows the makeup of the port-
add value, in the form of increased capital allocation and man- folio in terms of how companies or managers act to avoid harm,
agers.” benefit stakeholders, or contribute to solutions, Cannon said.
The network and suite of program offerings are especial- Ultimately, diversity “bolsters judgement and respect for all
ly important, given how crucial manager selection is for clients and is important both internally at GEM, as well as externally
to garner outperformance with alternative strategies like hedge with the managers we invest in,” Cannon said, adding that being
funds and private equity. on a team that “fosters an environment of diverse individuals
“We are betting that our private equity and hedge funds will encouraged to challenge and question” made him proud.
outperform if we select superior managers. Investing in an aver- Overall, across asset classes, the firm now serves a total of
age private equity or venture firm is not worth it, in my opinion, 38 clients, including 34 nonprofit clients, with combined assets
because the average private equity or venture fund doesn’t beat under management of $9.1 billion.
the public markets,” Cannon said. Some of its endowment and foundation clients include
“If we don’t find something compelling on the private in- McCallie School, Nathan Cummings Foundation, University of
vestment side that can beat the public market, we don’t need to North Carolina at Charlotte, University of California-Davis and
make the investment,” he added. Willamette University, among others, according to its website.
One subscription. All the comprehensive news you need.
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defined benefit plans and foundations and endowments.
Personnel Hires Firm & Strategy Manager Searches
& Departures Launches & RFPs
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Emerging Manager Monthly, June 2020 11News Features Columns Marketing Alternatives Searches Industry
Guest Column Elizabeth Cope has over 15 years of experience working
with investment advisers of all sizes, across all asset classes,
within the United States and parts of Asia and Europe.
She currently assists investment advisory firms and
their CCOs with policies and procedures development,
Compliance During The Pandemic regulatory filings, annual review planning and oversight,
forensic testing, marketing material reviews, and mock SEC
examinations.
By Elizabeth Cope, SEC Compliance Solutions
We have settled into work from home material facts relating to your advisory Also, the FAQ doesn’t say the receipt
life and found a (somewhat) new normal relationship with clients, it is the staff’s of the PPP must be disclosed in your
of work during the pandemic. When the view that your firm should provide disclo- Firm’s ADV. It says “…if your firm is ex-
dust settles, we expect the SEC to fo- sure of, for example, the nature, amounts periencing conditions that are reasonably
cus on areas such as business continui- and effects of such assistance. If, for in- likely to impair its ability to meet con-
ty and supervision of employees during stance, you require such assistance to tractual commitments to its clients, you
the pandemic. We also wouldn’t be sur- pay the salaries of your employees who may be required to disclose this financial
prised if the SEC conducts sweep exams are primarily responsible for performing condition in response to Item 18 (Finan-
of pandemic responses. For compliance advisory functions for your clients, it is cial Information) of Part 2A of Form ADV
professionals, there are some important the staff’s view that you would need to (brochure), or as part of Part 2A, Appen-
elements of your compliance program to disclose this fact. In addition, if your firm dix 1 of Form ADV (wrap fee program bro-
review, document and possibly change. is experiencing conditions that are rea- chure),” (emphasis added by SCS).
While you should still be conducting your sonably likely to impair its ability to meet
normally scheduled annual review test- contractual commitments to its clients, SCS Suggests
ing and documentation, we suggest a few you may be required to disclose this fi- If your firm received the PPP loan to pay
areas of focus to ensure you are prepared nancial condition in response to Item 18 for payroll expenses, review the condi-
to demonstrate how your firm responded (Financial Information) of Part 2A of Form tions in which you received the loan, your
during the pandemic. ADV (brochure), or as part of Part 2A, Ap- firm’s financial situation and its ability to
Here are some things to think about pendix 1 of Form ADV (wrap fee program contractually meet your commitments
and prepare when documenting your brochure). to your clients to determine whether or
firm’s experiences during the pandemic not disclosures are warranted. Naturally
and preparing for a possible exam. Before we dissect this FAQ, we want to the most conservative approach would
point out that the SEC indicates on the be to disclose in your ADV, but like we
Paycheck Protection Program (PPP) FAQ page that these answers “…represent mentioned before we believe this to be
Loan the view of the staff of the Division.” They a “facts and circumstances” review and
On April 27, 2020 the SEC issued Fre- are not “…a rule, regulation or statement not a hard line in the sand. Regardless of
quently Asked Questions about pandem- of the Securities and Exchange Commis- your decision to disclose or not, it is of
ic related issues, including one question sion (SEC).” the utmost importance to document your
about the disclosure obligations if in re- Given the fact that the answer in- review to demonstrate your professional
ceipt of the PPP loan. cludes , “…if the circumstances leading judgement. Evidence in your review that
you to seek a PPP Loan or other type of your firm reviewed the FAQs and made
Q. I am a small advisory firm that meets financial assistance constitute material an informed and well-thought-through
the requirements of the Paycheck Pro- facts relating to your advisory relation- decision based on your unique facts and
tection Program (PPP) established by the ship with clients, it is the staff’s view circumstances. If your firm received a
U.S. Small Business Administration in that your firm should provide disclosure PPP Loan, you should evaluate the facts
connection with COVID-19. If I receive of, for example, the nature, amounts and and circumstances surrounding your de-
or have received a PPP loan, what are my effects of such assistance,” (emphasis cision to apply and obtain the loan.
regulatory reporting obligations under added by SCS) makes the requirement
the Investment Advisers Act of 1940 to to disclose a “facts and circumstances” Option 1: Regardless of why you took the
my firm’s clients? test. Some might interpret this to mean loan (insurance plan or necessity) you
disclosure is required if you take the PPP could opt to disclose to your clients. The
A. As a fiduciary under federal law, you Loan. Others would say only if the loan FAQ indicates disclosure in ADV Part 2A,
must make full and fair disclosure to your is material to business continuation. You Item 18 is warranted if your firm cannot
clients of all material facts relating to the should take into consideration the facts meet its contractual obligations to the
advisory relationship. If the circumstanc- related to your firm, your clients and ma- client. If that is not the case, one could
es leading you to seek a PPP loan or oth- teriality to determine whether the dis-
er type of financial assistance constitute closure is warranted. Continued On Next Page
Emerging Manager Monthly, June 2020 12News Features Columns Marketing Alternatives Searches Industry
COLUMN: Compliance During the Pandemic
Continued From Previous Page
argue disclosure in another fashion could changes and implementation are still fresh tronic use policies if you are going to limit
be acceptable. The benefit to disclosing is in your mind, take the time to document how the technology can be used and train
you opt for complete transparency with how your BCP worked. employees on these requirements. Final-
your clients and you take the conservative ly, have employees attest to their under-
approach that the SEC will expect all PPP SCS Suggests standing.
Loan recipients to disclose the loan. The For documentation, we suggest laying out
downside is you could alarm your clients a simple timeline of how you responded to Supervision
and cause unwanted inquiries into the fi- the pandemic. Some of the areas we sug- With a majority of firms having employees
nancial strength of your firm. If you dis- gest you cover, where applicable, are: working remotely it is important for com-
close, document in your annual review why • If employees had to work from home, pliance to adjust how they “supervise” the
you chose to disclose. Pay close attention how systems and controls were imple- compliance functions and activities of its
to the FAQ which suggests the SEC wants mented. employees.
the “nature, amount and effects of such as- • If your firm had to change policies,
sistance.” either temporarily or permanently, docu- SCS Suggests
ment the rationale. Communication and training are important
Option 2: If you took the loan and after a • If your plan or elements of the plan during this time. Here are our suggestions:
thorough analysis decide to not disclose were not found to be effective, document If you have not already, make sure to
that fact on your ADV, you must document how your firm responded and corrected. send e-mail reminders, train employees or
your rationale. Take language from the • Note any new technology or process schedule 1x1 check-ins to remind employ-
FAQ and explain how it does not apply to implemented to assist the firm and its em- ees of best practices like:
your circumstances. For example, if you ployees. • shredding documents with sensitive
did not need the loan to “pay the salaries of client information,
your employees who are primarily respon- Use of New Technology • not opening attachments from sus-
sible for performing advisory functions for Many firms have taken this time to im- picious email addresses or clicking links
your clients,” use this fact to substantiate plement new technology in order to con- from unknown email addresses,
why you are not disclosing the loan. If your tinue collaborating while working in a • proper use of technology such as
firm is not experiencing “conditions that remote situation. The use of new technol- Zoom and Microsoft Teams,
are reasonably likely to impair its ability to ogy should be reviewed by compliance to • encrypting sensitive e-mails,
meet contractual commitments to its cli- determine if additional procedures and/ • updating virus and malware software
ents,” document this fact to support your or training are warranted. Some areas (if not centralized by your firm), and
decision. Document your rationale and of concern are a) whether the use of this • documenting client conversations in
evidence your thought process to support technology generates records that need your CRM.
your decision so you are prepared in the to be retained b) whether the technology Document any training with a list of
event you are examined and the SEC ques- has the proper safeguards to protect the attendees, copies of materials used or a
tions your decision. firm and clients against cyber threats and summary of the training topics to show
Ultimately, this is a business decision c) whether use of this technology requires supervision of employees during the pan-
that your firm should take time to discuss supervision of staff to reduce the risk of demic. Additionally, you can ramp up
and document with professional judge- compliance violations. e-mail and chat reviews.
ment. Consider the facts and circumstanc-
es pertinent to a client in their evaluation SCS Suggests Conclusion
of you, their advisor. We suggest documenting the review of any As firms have been adapting and adjusting
new technology, taking into consideration operations due to the pandemic, it’s just as
Business Continuity Plan Implementa- the aforementioned areas to determine important for compliance to adapt and ad-
tion and Review if additional policies need implementa- just. The SEC hasn’t slowed down their ef-
Chances are you implemented your Busi- tion, new safeguards with the assistance forts and will continue its mission of pro-
ness Continuity Plan (BCP) and employ- of IT need to be added, and/or employee tecting the investor. Please don’t panic or
ees are working from home. You may have training needs to be conducted. If it’s cost feel the need to do “extra.” We just want to
changed some procedures, such as deliv- effective for your firm, we recommend remind you to be diligent and, with oper-
ering documents electronically instead archiving technology used for chatting ations being slightly different, adjust your
of hardcopy because of the inability to internally and with clients, as is current- risks and reviews. And most importantly,
process mail delivery services. While the ly expected for e-mails. Adjust your elec- document it all!
Emerging Manager Monthly, June 2020 13News Features Columns Marketing Alternatives Searches Industry
There Is So Much Noise In
The Market. How Can
We Make Our Story
Resonate Now?
Sandra Powers Murphy, author of The Road to AUM: Driving Assets Under Management through
Effective Marketing and Sales, and CEO of Noble Ark Ventures, a business development and
organizational consulting firm, provides the following tips on breaking through market noise.
First, we are glad you asked how to make your ‘story’ resonate. At the end of the day, good markets
"ASK SANDRA"
or bad, it is your team’s ability to tell your story that will drive interest and assets. It is also ideally Submit your Questions!
the clearest set of statements about what makes your firm unique. Its mere existence contributes
notably to team member engagement. A simple team meeting around the firm’s Unique Selling Have a question about organizational
Proposition (USP) will tell you all you need to know about the power of the firm’s story, and what dynamics, business development best
makes it so important. As a Licensed Certified Social Worker (LCSW), I regularly find my mental practices and/or how to effectively
health training coming into play in the consulting work we do around both team engagement and build market presence and AUM?
process improvement. Regarding our collective mental health, we could (and someday should) do
an entire column around remaining positive, motivated, and engaged during these challenging The Noble Ark Ventures team will be
times. However, for today, let us focus on a universal premise— that success in business feeds on answering questions submitted by
itself, creating the motivation and engagement we need to keep moving forward. Building our EMM subscribers each month.
businesses creates positive energy and by focusing on building our businesses we can effect
positive change beyond ourselves, as well. Ultimately, your team’s ability to tell the firm’s story is
Send your questions to:
central to successful business development AND team engagement.
info@noblearkventures.com.
Your Story x 3
The notion of story development is not new. Yet, many will focus first on the story itself. We would like to suggest that understanding how far
reaching this story must go—and how consistently it must go there—is paramount to success. Why? It is common in organizations to have the
marketing person or sales professionals cheering on a certain version of what the firm is and does. This version may even have the benefits of
being clear, concise, and constructive. Then, to the prospects surprise, a very different version of the firm’s story is told by research
professionals, by different channel teams and on the firm’s website and social media platforms. What really is the firm’s story? Do we care
enough to take the time to figure it out? Confusion, excess wording, lack of clarity and purpose reign supreme within many organizations. The
smaller the organization, the greater the lack of clarity and consistency, in our experience. To ensure you have your story fully vetted, keep in
mind that there are three core media interfaces for implementation of that story that require consideration, team engagement and ongoing
oversight: core collateral, presenting and the firm’s digital profile.
Be Your Own Prospect
Picture your prospects and clients. They are either finding you in the digital world for an anonymous assessment, talking to your team on a call
or in meetings, or reviewing words and graphics you’ve put on a page. How well are these three interactions telling your story? Are they telling
the same story? For each of these media sources, the consistency should be evident in word usage, depth, focus and clarity. In working with
clients across business lines, products and firm size, we find that we can always find a lack of consistency across these three areas. Also, that
the less structure the firm has in place around protocol and collateral customization, the more varied the story. Make a commitment to take
the position of the prospect, and ‘receive’ these three media sources all on a single day. Compare what you heard in the presentation, to what
you read in the presentation, to what you see online about your firm. What stories did you hear? Which one did you like best? What do you
remember exactly about the firm from these stories? What questions were not answered that you need answered in order to justify moving
ahead? If you are wondering why it matters so much, consider the potential audience for these various media sources. Often, content is utilized
by competitors to poke holes in your story, or by researchers searching for red flags and inconsistencies as if it were a sport. Don’t give them
the satisfaction. Keep it clean, clear, concise and consistent across media. Your team will benefit immensely from that same clarity of purpose;
it will ensure consistency and build confidence.
Emerging Manager Monthly, June 2020
b b d l 14You can also read
