Allocating to Diverse & Emerging Managers | SALT iConnections Asia

TL;DR

Investing in emerging and diverse fund managers presents a significant opportunity for alpha generation, as they can offer unique perspectives and outperform traditional managers.

Transcript

foreign this is a very big room the big stage um but my name is Alexandra mcguigan and I am here with 100 women in finance which is the largest non-profit in the world for the empowerment of women in financial services and then also inclusive Asset Management which is my own company and in the last couple of years I've done a lot of work on emergin... Read More

Key Insights

• 🚨 Investing in emerging and diverse fund managers can provide access to unique and often untapped investment opportunities.
• 🖐️ Institutional allocators have a role to play in supporting emerging managers by providing capital, guidance, and operational assistance.
• 🤦‍♀️ The financial industry needs to address the barriers faced by individuals from minority backgrounds and women to create a more inclusive and diverse investment landscape.
• 🆘 Collaborative efforts, such as iadei.org, can help connect diverse managers with institutional allocators and promote diversity and inclusion in the industry.
• 🤨 Emerging managers face challenges in raising capital, battling higher compliance costs, and balancing multiple responsibilities.
• 🚨 Allocators can benefit from the competitive advantage of accessing specialized strategies and differentiated market insights offered by emerging and diverse managers.
• 🥺 Investing in emerging and diverse managers may lead to better risk-adjusted returns and improved portfolio diversification.

Questions & Answers

Q: How can diverse filters be used to identify exceptional investors?

Diverse filters can be used to assess fund managers from minority backgrounds or women who have successfully overcome higher barriers to entry and have proven themselves as exceptional investors.

Q: What are the challenges faced by emerging managers?

Emerging managers often struggle with raising capital due to limited track records, operational costs, and the need to balance different responsibilities like compliance, operations, sales, and investment management.

Q: How do institutional allocators source emerging and diverse managers?

Institutional allocators utilize various channels to source emerging and diverse managers, including industry events, networking platforms like 100 Women in Finance, and databases like iadei.org.

Q: How do emerging managers minimize the cost and leakage during the setup phase?

Emerging managers can minimize costs by partnering with strategic investors who provide a significant upfront ticket size and commit to increasing capital over time. Revenue-sharing agreements and future capacity rights are common in such partnerships.

Summary & Key Takeaways

• Alexandra McGuigan, CEO of Inclusive Asset Management, discusses the potential for seeking alpha by using a diverse filter in fund management.

• The barriers to entry in the financial services industry are higher for individuals from minority backgrounds or women, making those who succeed exceptional investors.

• A panel of industry experts from various financial institutions, including Cigna Life, CPP Investments, and Trinity Church Wall Street, share their investment objectives and strategies.