Consortium 2020 was all about change. The event took place amid a global health crisis that is changing how we work, a volatile economic climate altering the investment landscape, and peaceful protests demanding social change. Against this backdrop, Consortium’s mission – advancing diverse and women investment managers – has never been more relevant and important than it is at this moment.
For the first time, Consortium was presented in a virtual environment, and speakers and attendees were up to the challenge of moving online. In traditional Consortium fashion, panelists asked and answered tough questions, raised important issues, and engaged in unfiltered dialogue.
Consortium 2020 was the best-attended in its history with more than 500 participants, and over 200 were first-time attendees.
This year’s Consortium brought to light the “trifecta” of the health, economic, and social crises, and put in perspective their impact on investing with diverse and women managers. Several themes emerged:
DAMI’s Robert Raben posed an important question simply: He asked “what’s going on?” to a panel of LPs and Consultants who are considered leaders in the space, and he wondered why more LPs aren’t following their lead. Why are there are so many laggards when it comes to investing with diverse and women managers?
Panelists acknowledged the existence of market headwinds such as LPs moving to passive investing, reducing their lineup of managers overall, or a lack of information about diverse managers’ performance. But one panelist pointed out the existence of unconscious and conscious biases, and this theme was pervasive throughout Consortium.
So, how do LPs overcome biases that have been institutionalized across the investment industry? Some organizations have built dedicated diverse manager investment programs and are actively managing diversity within their firms as they recommit to being equitable and inclusive. Many are taking steps to better reflect the make-up of their constituents by implementing changes such as:
LPs collectively acknowledged there is more work to do to overcome what some have called the “fear factor” of investing with managers that are not of the “typical” mold.
LPs, consultants, and GPs alike delivered practical advice and shared heartfelt experiences to provide a roadmap to how GPs may gain better access to institutional investors. One consultant’s advice:
Additional real-world advice:
GPs’ non-performance factors are also critical: organizational stability, team dynamics, operations, back office support, communications, and cybersecurity. GPs are well-served to ensure all of these boxes (and more) are ticked and ready for review.
How do LPs achieve a talent funnel that looks representative of the community? What are some of the best practices?
An LP noted that his firm is accustomed to risk, but not to the high level of uncertainty that exists in today’s environment. The impact of COVID-19 on the investment (and every) industry is deep and far-reaching. Many shared their perspectives on the current environment, ranging from “business as usual,” to “everything has changed.”
From an investment perspective, the virus has affected asset valuations in different ways, so opinions tended to vary. In general, it was agreed upon that during times of turmoil, sticking to asset allocation is crucial. Some LPs shared thoughts about their strategies:
COVID-19 created uncertainty for people and communications as well. In addition to the obvious health concerns, all firms must mitigate the business risks associated with communications and operations. This can be done through a collaborative culture, use of technology, and properly prioritizing. Communications with external stakeholders must balance cadence, tone, and messaging. If possible, a manager should provide data on how their portfolio has performed in prior downturns and what may be expected as we move toward recovery.
Consortium highlighted the significant role of consultants in advancing the industry. LPs stressed how important it is that consultants make organization-wide commitments toward diversity, consistent with how LPs are doing at their own firms.
LPs recognized that it’s up to them to hold their consultants accountable, and pointed out ways that they can do so; one in particular focused on annual reporting on three factors:
These and other reporting functions allow LPs to better analyze how their pipeline of managers is sourced, and assess if their consultant’s vision is in-line with theirs.
NEPC’s Sam Austin: “We are data-driven in our approach; we want to be accountable in our practices, transparent in reporting, and responsive to the diverse manager community.”
Consortium 2020 featured four distinct sessions: LP Workshops, General Session, LP Intensive, and GP Bootcamp. View the full schedule here: http://consortium.gcmgrosvenor.com/schedule/
Eight workshops on June 4 gave diverse and women managers access to some of the top LPs who invest in this space.
On June 11, members of the GCM Grosvenor executive team welcomed all participants to Consortium, before hosting a panel of top LPs in the diverse and women manager space.
This peer-to-peer discussion allowed LPs and consultants to have open dialogue about their programs and the evolving role of the consultant in the diverse and women manager industry.
GPs received real-world and real-time training and advice on how to position their strategies, how to present their firms, and ultimately, how to gain access with institutional investors.
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