Key Takeaways
- • U.S. colleges and universities collectively manage over $800 billion in endowment assets, yet only 18 of 50 eligible schools (36%) in the Knight Foundation study disclosed asset allocation data to diverse-owned investment firms, revealing a transparency crisis in institutional capital deployment.
- • Among the 18 schools that provided verifiable data, allocations to diverse-owned asset management firms ranged from zero to 38.5% of U.S.-based assets under management, indicating extreme variation in diversity commitment despite public institutional statements supporting equity initiatives.
- • Diverse-owned asset management firms collectively managed only 1.4% of U.S.-based AUM as of 2021, despite research demonstrating performance parity with firms owned by white men, signaling structural underutilization of minority- and women-owned investment managers.
- • The NYU Stern Center for Business and Human Rights, in partnership with the Knight Foundation and Global Economics Group, expanded its 2022 interim report with additional data, though the low voluntary disclosure rate (36%) prevents establishment of a meaningful baseline for measuring industry progress.
- • Addressing diversity in endowment asset management is framed as both an equity issue and a talent retention problem, as institutional exclusion of diverse-owned firms prevents highly qualified investment professionals from accessing capital allocation opportunities.
Summary
The Knight Foundation's Diversity of Asset Managers Research Series, conducted in partnership with NYU Stern Center for Business and Human Rights and Global Economics Group, reveals significant transparency gaps and persistent underutilization of diverse-owned asset management firms across U.S. higher education endowments. The research, published in April 2024, examined the 25 largest public and 25 largest private university endowments—institutions collectively managing over $800 billion in assets.
A critical finding centers on institutional reluctance to disclose diversity metrics. Despite explicit study participation invitations, 24 of the 50 eligible schools declined to share independently verifiable allocation data. This 52% non-participation rate undermines the ability to establish baseline measurements for future progress monitoring. Among the 18 schools that did participate, allocations to diverse-owned investment firms varied dramatically, ranging from zero percent to 38.5% of U.S.-based assets under management. This wide disparity suggests inconsistent commitment to diversity mandates across institutions that publicly promote equity and inclusion.
The research builds on a 2022 interim report and highlights a structural problem within the broader investment management industry. Women- and racial or ethnic minority-owned asset management firms managed only 1.4% of U.S.-based AUM as of 2021, despite empirical evidence demonstrating performance equivalence with firms owned by white men. This significant gap underscores systematic exclusion rather than performance-based selection. The report frames this underutilization as both a diversity equity issue and a talent pipeline problem—institutional exclusion prevents skilled investment professionals from accessing capital, limiting career advancement and economic opportunity within the asset management industry.
The Knight Foundation study positions university endowment practices as particularly consequential given institutional commitments to diversity and service to diverse student and alumni communities. The report argues that universities cannot authentically advance diversity commitments while systematically underallocating capital to diverse-owned investment managers. The authors recommend increased transparency and expanded allocations as necessary steps toward closing the gap between institutional diversity rhetoric and actual capital deployment practices.
A critical finding centers on institutional reluctance to disclose diversity metrics. Despite explicit study participation invitations, 24 of the 50 eligible schools declined to share independently verifiable allocation data. This 52% non-participation rate undermines the ability to establish baseline measurements for future progress monitoring. Among the 18 schools that did participate, allocations to diverse-owned investment firms varied dramatically, ranging from zero percent to 38.5% of U.S.-based assets under management. This wide disparity suggests inconsistent commitment to diversity mandates across institutions that publicly promote equity and inclusion.
The research builds on a 2022 interim report and highlights a structural problem within the broader investment management industry. Women- and racial or ethnic minority-owned asset management firms managed only 1.4% of U.S.-based AUM as of 2021, despite empirical evidence demonstrating performance equivalence with firms owned by white men. This significant gap underscores systematic exclusion rather than performance-based selection. The report frames this underutilization as both a diversity equity issue and a talent pipeline problem—institutional exclusion prevents skilled investment professionals from accessing capital, limiting career advancement and economic opportunity within the asset management industry.
The Knight Foundation study positions university endowment practices as particularly consequential given institutional commitments to diversity and service to diverse student and alumni communities. The report argues that universities cannot authentically advance diversity commitments while systematically underallocating capital to diverse-owned investment managers. The authors recommend increased transparency and expanded allocations as necessary steps toward closing the gap between institutional diversity rhetoric and actual capital deployment practices.
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