On July 10, 2020, Congressman Emanuel Cleaver, II (D-MO), and Congressman Joseph Kennedy, III (D-MA) sent inquiries to 25 colleges and universities asking for information regarding the participation of women-and minority-owned asset management firms in the administration of endowment assets.
“Despite overrepresentation of diverse-owned firms in the top quartile of industry-wide performance, a study by the Knight Foundation found that firms owned by women and minorities manage just 1.3 percent of the assets in the $69 trillion asset management industry. In 2020, women and minority-owned firms manage a penny for every dollar managed by firms owned by white men. Despite decades of advocacy, market forces have failed to correct the ugly legacy of systemic racism which continues to bear fruit.”
~ Congressman Emanuel Cleaver, II (D-MO) and Congressman Joseph Kennedy, III (D-MA)
24 of 25 institutions submitted response letters to the Congressmen aiding Congress in its understanding of institutional policies, practices, and efforts. Reports of assets under management with diverse-owned firms ranged from 5.1 percent to 35 percent. Explanations for not providing an analysis or estimate centered on difficulties obtaining and identifying firm ownership information.
In 2020’s spotlight on racial and gender inequity, Institutional investors have expressed an interest in investing more of their assets with money managers and consultants with diverse ownership and diverse workforces.
Paradigm Institutional Investments is an African-American owned institutional investment consulting firm that believes that including different voices and experiences enriches an institution’s investment process and leads to optimal solutions. Paradigm provides outsourced CIO services, serving as an extension of an institution’s staff and board. They offer a depth of resources and access to a full range of investment opportunities combined with nimble and dynamic rebalancing to allow institutional staff and boards can focus on strategic, high-level decisions.
Quentin McCorvey and J. Burner Crew, Paradigm‘s co- founders, are men of principle, character, and high integrity. Paradigm’s unique platform and investment advisory expertise are unparalleled in the field of minority-owned asset portfolio counselors, nation- wide. Notably, Paradigm has been well received by many outstanding non-profit foundations and higher educational institutions, and public sector entities. I am proud to serve as a member of their advisory board.
~Marc Byrnes, Company Chairman Emeritus Oswald Companies
Minority emerging managers and consultants are faced with several challenges – establishing a track record, managing concentration risk, having a shorter runway to manage downsides, are just the start. In recognition of these challenges, Paradigm joined ELITE’s inaugural Cleveland cohort to develop clear actional plans around their future growth and take advantage of ELITE’s extensive global network.
“Paradigm is led by two exceptional and experienced partners who deliver top-level performance. They excel in an industry which stands out for its lack of inclusion in spite of reports that demonstrate diverse and minority-led teams outperform their homogeneous counterparts In today’s environment of corporate statements and support for equity and inclusion, I’m hopeful that Paradigm experience growth commensurate to its performance and capabilities.”
~ Brian Hall, Executive Director, Equity & Inclusion, Greater Cleveland Partnership.
In 2020, Paradigm created The Inclusionary Investment Portfolio (TIIP) for organizations that seek Diversity, Equity and Inclusion advisory of their investment portfolios and the pursuit of best-in-class solutions and performance. TIIP is not a fund, but rather, it is a model portfolio of varying degrees of risk and return, which is managed by Paradigm and its sub-advisor on a fully discretionary basis, tailored to specific client risk and return profiles.
The purpose of TIIP is to exceed a CPI + 5% return with an efficient risk profile, prudent diversification, and competitive fees. TIIP can be implemented across an institution’s entire investment portfolio, or for a pre-designated portion of an institution’s investment portfolio.
Paradigm’s approach with TIIP is to find top-performing managers in all asset classes that incorporate diversity, equity, and inclusion into their investment process.
Their process with institutional investors follows three important steps:
1. INCLUSIONARY INVESTMENT GUIDELINES: By leveraging experience and perspective, Paradigm leads the development of inclusionary investment guidelines within the institution’s investment policy.
2. ALIGN TIIP WITH OBJECTIVES: Paradigm study the institution’s spending needs and investment policy objectives and implement the TIIP model that aligns with those priorities.
3. CLEAR MEASUREMENT: Paradgim’s customized reporting and commentary are thorough, clear, and useful. It measures and benchmark investment performance against policy objectives, market indices, and peers.
If you are part of an institution or a Non-Profit Board of Directors that use institutional investment consultants and have an inclusion strategy or interest, one way to achieve the inclusion strategy is to sequester a portion of the investment portfolio to be managed by an outsourced minority investment consultant.
“Dismantling systemic racism and promoting equity for people of all backgrounds requires an intentional approach, especially when it comes to investments. Investment strategies are stronger when diverse investment managers are thoughtfully engaged and when policies and portfolios are deliberately structured to advance equity.”
~ Ronn Richard
Strategic Questions Leaders should be asking themselves and the Non-Profit Boards on which they serve:
1. Does your organization/board have an inclusion strategy or interest?
2. Do you use institutional investment consultants?
(a) If not, would you consider using a capable and qualified minority investment consultant
(b) What barriers or hurdles would they need to cross for serious consideration?
(c)Would you consider sequestering a portion of your investment portfolio to be managed by an outsourced investment consultant as part of an inclusionary opportunity?
We find that many organizations are struggling with balancing a fiduciary duty of seeking financial success with moral and social justice considerations in their investment approach. The beauty of our business model is that we seek to find top-performing managers in all asset classes. We lead not with diversity and inclusion, but with performance. Engaging Paradigm helps institutional investors balance mission and margin. It’s time for a change: We’re driving change. We envision a new Paradigm in institutional investing.
~ Quentin McCorvey, President Paradigm Institutional Investments.
For more information on Paradigm Institutional Investment, contact Quentin McCorvey.