Knight Diversity of Asset Managers Research Series: Asset Management Industry – Knight Foundation
Learning and Impact

Knight Diversity of Asset Managers Research Series: Asset Management Industry

Since 2017, our research has followed the state of diversity in the asset management field, which continues to acutely lack diversity of firm ownership.

Since 2017, we’ve been tracking the state of diversity in the asset management industry. In our most recent report, the broader asset management industry statistics remain dismally low––a mere 1.4% of assets under management (AUM) are currently managed by diverse-owned firms. 

Despite the persistent underrepresentation, the pace of change in this regard has been disappointingly slow. Yet our research consistently reaffirms a critical point: returns from firms owned by women and individuals of color are at least at par with their less diverse counterparts while their AUM is smaller. This means that there may be opportunities for outperformance that are being missed by investors. It’s imperative that the investment industry embraces varied viewpoints to identify risks and opportunities in both established and emerging markets. By diversifying who manages our nation’s wealth, we can better tap unforeseen opportunities and build a more equitable and prosperous future for us all.

Key Findings

We find that across asset classes, minority- and women-owned firms are underrepresented relative to other firms.

As of September 2021, only 1.4% of total U.S.-based assets under management (AUM) in the sample are managed by diverse-owned firms (minority-owned and women-owned).

Minority- and women-owned firms represent 6.1% of US-based firms, respectively, and manage a much lower percentage of AUM overall. 

  • Minority-owned firms represent 6.1% of U.S.-based firms across asset classes, with the highest representation in hedge funds (9.3%) and mutual funds (9.2%).
  • Women-owned firms also represent 6.1% of U.S.-based firms, with the highest representation in private equity (7.2%) and mutual funds (6.7%).
  • Despite relatively high representation percentages, diverse-owned firms manage only a small portion of AUM: 0.7% for both minority-owned and women-owned firms, and 1.4% for diverse-owned firms overall.

Representation of minority-owned and women-owned firms and AUM has increased,  though is still indisputably low.

Diverse representation in terms of AUM has increased since 2011, particularly for private equity and hedge funds. This trend is complemented by the fact that total AUM of non-diverse-owned firms has grown significantly, with $81.05 trillion managed by non-diverse-owned firms compared to $1.19 trillion managed by diverse-owned firms.

That said, AUM growth in diverse-owned firms has been gradual, and short-term. The percentage of diverse-owned AUM grew from 1.0% to 1.4% between 2016 and September 2021. However, growth is flatter if we consider the past decade in its entirety, with only a 0.1% increase between 2011 and September 2021.

Our robust, empirical analysis finds no statistically significant performance differences between diverse-owned and non-diverse-owned funds. 

Watch: The continued fight for diversity and equality in asset management

Featuring: Jose Minaya, CEO, Nuveen; Rupal Bhansali, CIO of International & Global Equities, Ariel Investments; Seema Hingorani, Managing Director, Morgan Stanley Investment Management; Juan J. Martinez, Vice President / Chief Financial Officer and Treasurer, Knight Foundation. Moderated by Danielle Verbrigghe, Managing Editor, FundFire.