Minority Owned Opportunities vs Fiduciary Duty percent, manager, question, fiduciary, investment

burning0spear

<Rant>

Does anyone view the trend of limiting the investment opportunities of Endowment/Pension/State Treasuries by mandating a percent of investments must go to Social Responsible Investments (SRIs) and/or minority/woman owned investment firms a breach in fiduciary duty by the investment committees/manager?

I am obviously bias due to my partnership in a non-diverse alternative firm, but many of the our prospects first question in their due diligence is "Are you a minority owned investment company? Yes/No". I must speculate that if we were minority owned, our AUM would be much larger then it is today.

In my world I invest according to risk/return profile, not based on the ethnicity of company management. If only we could hold the same standards to our Federal and State government agencies/universities.

In private investments (FOF, HF, Family Office), if you want to avoid certain investments and/or concentrate on SRIs/minority owned companies, I have no issue with that. However you are limiting your investment scope, and according to the old faithful CAPM, will have a less efficient frontier.

</Rant>

Unforseen

willsucceed Wrote:
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> Does anyone view the trend of limiting the
> investment opportunities of
> Endowment/Pension/State Treasuries by mandating a
> percent of investments must go to Social
> Responsible Investments (SRIs) and/or
> minority/woman owned investment firms a breach in
> fiduciary duty by the investment
> committees/manager?

No. People are free to choose their investment managers based on style, historical returns, hair color, outfit selection, first letter of their last name, etc. Doesn't mean that choosing it on anything other than the managers ability is a good idea, but it will happen.

> I am obviously bias due to my partnership in a
> non-diverse alternative firm, but many of the our
> prospects first question in their due diligence is
> "Are you a minority owned investment company?
> Yes/No". I must speculate that if we were
> minority owned, our AUM would be much larger then
> it is today.

Sounds like sampling error based on the clients you come into contact with. I don't know a lot of people losing business over this question. When push comes to shove, most people are looking for an investment manager who will perform well given their mandate.

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