Manager culture, DEI efforts a big focus of top investors

The culture of money management firms and the way leaders treat their employees, concentrate on workforce diversity and create supportive working conditions — as well as producing strong returns — are important assessment factors for asset owners, said a panel of four senior women investment officers.

The panelists agreed on many points during their session — Asset Owners Weigh In — during Pensions & Investments’ first Future of Work conference held as part of its Best Places to Work in Money Management program on Dec. 14 in New York.

“The culture of a money manager is a key consideration for us. We look for culture that results in successful investment strategies. It’s also critical for us to pay attention to manager culture that considers diversity and ESG,” said Angela Miller-May, CIO of the $56.6 billion Illinois Municipal Retirement Fund, Oak Brook.

Ms. Miller-May said she and her team evaluate the culture of IMRF’s managers for the system’s annual compliance report and ask managers for their diversity statistics as a way to check on the alignment of interest between the manager and the fund.

Other panelists also are monitoring the diversity of their money managers.

The office of investments of The Smithsonian Institution, Washington, began tracking ESG and diversity, equity and inclusion factors in money managers’ investment strategies since 2017, said Amy Chen, CIO and undersecretary for administration.

“DEI is a business decision, not a value issue. Diversity improves productivity and creativity,” Ms. Chen said, adding that she and her team check the diversity not only of a firm’s senior partners but also of lower-level employees.

“Money manager culture is a difficult thing for us to assess,” Ms. Chen said, noting that “investors do not want to hire a manager that has a toxic work environment.”
She oversees investment of the Smithsonian’s $2.5 billion endowment and its $1.3 billion defined contribution plan.

Given that Delaware is a coastal state and at risk of flooding as climate change progresses, state Treasurer Colleen C. Davis said she and her team are “very concerned about environmental issues.”

On the DEI front, Ms. Davis said that it’s important that money managers create hiring pipelines for young people and candidates with diverse backgrounds that they can recruit from later.

The treasurer’s office also offers internships to familiarize younger workers with jobs in investment management and finance. Ms. Davis noted that finance is Delaware’s second-largest industry after agriculture.

Ms. Davis’ office in Dover manages a total of $4.8 billion, of which $1.6 billion is managed in a deferred compensation plan.

The investment team at International Paper Co., which is headquartered in Memphis, Tenn., managed the company’s $12 billion defined benefit plan and its $7 billion defined contribution plan remotely throughout the COVID-19 pandemic, said Diana Winalski, New Canaan, Conn.-based director of 401(k) product management.

“We did move a lot of money to managers we only met through Zoom calls. We were able to meet with higher-level executives via Zoom than we normally do,” Ms. Winalski said.

She said working conditions at International Paper will evolve going forward and “newer people in our group will need support and guidance” going forward.

The Smithsonian’s Ms. Chen said, “Zoom is a very efficient way to make decisions. Everyone has the same square. Everyone is equal.”

Zoom has been “very helpful” during the pandemic, she said, but added that “it’s good to be together” in person.