Why Invest with Diverse Managers?

The Facts are Compelling

Debunking the Myths

Diverse-owned alternative asset management firms face the same challenges as their non-diverse competitors. But they’re also faced with a host of unsubstantiated misconceptions.

Here we provide a healthy dose of truth and accuracy to debunk mistaken beliefs.

Room for Progress

$82 Trillion

US-based AUM

1.4% Invested

In diverse-owned firms

Common Myths about Diverse-Owned Alternative Investment Firms

Myth #1

Diversity comes at a cost to performance

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This myth represents the most-common misconception.

Yet, the Knight Foundation’s 2021 Diversity of Asset Managers Research Series, reported that across all asset classes, non-diverse firms do not outperform diverse-owned firms.

NAIC’s own performance study, Examining the Returns, similarly supports the truth that inclusion and outperformance often go hand-in-hand.

Myth #2

Diverse managers are the same as small and emerging managers

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The term “diverse manager” addresses firm ownership, while the term “small/emerging manager” is applied based on assets under management and/or length of track record.

NAIC membership includes numerous diverse firms that oversee more than $1 billion in AUM, debunking the idea that all diverse firms are small or emerging.

Myth #3

Diverse managers are
hard to find

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NAIC, itself, has a near-200-member roster of diverse-owned firms across Private Equity, Venture Capital, Private Credit, Hedge Funds, Real Estate, and Funds of Funds.

Our programs provide frequent opportunities to connect allocators with member firms.

Myth #4

Diverse managers invest exclusively
in diverse entrepreneurs

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While some NAIC member firms focus on providing capital to diverse entrepreneurs and investing in communities of color, the overwhelming majority are founder agnostic and performance driven.

Myth #5

Diverse managers lack
experience and expertise

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Most diverse managers have graduated from the same venerable universities and gained experience at the same leading investment firms as their non-diverse counterparts.

Myth #6

ERISA restricts considering racial, ethnic and gender diversity

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Public pension funds are setting the standard for investing with diverse external managers.

A recent Morgan Stanley survey, Asset Owners and Investing in Diversity: Intention versus Action, reported that the industry can look to public pensions for evidence of impact and inspiration for how to diversify managers.

Much of NAIC’s work focuses on debunking these myths and showing that when a diverse-owned firm outperforms, its team is not the outlier but rather the norm and the result of a proven investment thesis, strong track record and high-quality management experience.