Less than 2% of global assets under management, across mutual funds, hedge funds and other asset classes, is managed by women and people of color, according to a 2019 Knight Foundation report. After a decades-long career in investing, University of Rochester Senior Investment Officer Rob Rahbari knew statistics like these. So in 2020, when the university’s president challenged every university department to recommit to diversity, equity and inclusion, Rob and his teammates developed an open-source list of funds owned and managed by women and people of color to share with other endowments and foundations.

“It doesn’t mean anything until dollars start moving in the direction of these diverse firms. We haven’t seen a sea change there yet, and we’ll only be satisfied when that happens.”

 Moving investment dollars is challenging and will likely be a slow process. Rob hopes his team’s list is just the first step. 

ABOUT THE GUEST:

Rob Rahbari is the Senior Investment Officer and Assistant Treasurer at the University of Rochester, where he helps to manage the university’s endowment. Prior to joining the university, Rob managed client assets in J.P. Morgan’s private bank sector. In 2006, Rob co-founded RAS Capital Management, an India-focused hedge fund firm with offices in New York and Mumbai. He has also performed due diligence on investment managers, led business development efforts for startups, and represented investment management firms as an attorney. Rob is a graduate of the University of Michigan and the University of Chicago. 

Social, website, book link:

To learn more about the University of Rochester’s endowment: https://www.rochester.edu/endowment 

Connect with Rob on LinkedIn here.

EPISODE HIGHLIGHTS:

• The University of Rochester has about $3 billion in its endowment. In 2020, the university’s president called on every department to recommit to diversity and inclusion efforts. Rob and his teammates developed an open-source list of funds managed and firms owned by women and people of color to share with other endowments and foundations.
• Rob and his team are hosting calls about diversity within various sectors and are developing a content series to continue conversations about diversifying your investments.
• Anjali notes that there has been a significant shift in dollars, at least on the retail investment side, toward impact investments as Millennials gain more market share. Diversity is one ESG consideration, but for now, investors don’t have much insight into who is working at investment firms. 
• Some firms, like Illumen Capital, Plexo, and Backstage Capital, are primarily focused on investing in companies with diverse founders or staff. Others, like Rock Creek Group and Cambridge Associates, have personnel dedicated to getting diverse firms noticed by institutional investors. 
• According to a 2019 report funded by the Knight Foundation, just 1.3% of global AUM across mutual funds, hedge funds and other asset classes is managed by women and people of color.
• Institutional investors tend to work with firms with lengthy track records or with whom they have long relationships. If institutions can move even small parts of their portfolios to funds with diverse leadership, it can help those up-and-coming funds develop the credibility they need within the industry to attract additional clients.
• The University of Rochester is working with industry organizations to standardize the questions investment managers are asked about diversity to improve response rates and compliance. 

WORDS OF WISDOM: 

“Having a few presentations and phone calls and people sounding enthusiastic is all nice, but it doesn’t mean anything until dollars start moving in the direction of these diverse firms. We haven’t seen a sea change there yet and we’ll only be satisfied when that happens.”

“The good news is that there are a good number [of investment firms run by women and people of color] and you could easily fill a good portfolio with them.”

“Having a list does not an investment portfolio make. You’ve got to go and get to know all of these different firms and select the ones that are right for your goals, which vary a lot from client to client.” 

“I think the groundswell will come from proactive, creative advisors and their clients.”

“My personal point of view is that there should be a focus on historically underrepresented minorities when we’re trying to source and locate and help gain prominence for firms — started, managed, owned by people who traditionally have been excluded or disadvantaged in markets.” 

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If you liked this episode, here’s another I think you’ll enjoy: Episode 42: Creating a Mission-Driven Business with Brian Thompson