The field of financial advisors is dominated by men, with the number of female advisors hovering at about 25 percent for years, but when it comes to the ownership of asset management firms the picture is even worse, according to a study by the Knight Foundation released Wednesday.
The number of women- and minority-owned asset management firms is low, and the percent of assets they have under management is even smaller. Knight Foundation defined minority- or women-owned firms as those having at least 25 percent diversified ownership.
Using several large databases, Knight looked at mutual funds, hedge funds, private equity funds and real estate funds to determine what percentage of the industry is controlled by women and minorities.
The study found that firms controlled by women and minorities represent just 1.1 percent of the $71.4 trillion in assets under management in the four categories. The low number cannot be attributed to a lack of quality in diverse-owned firms, Knight says, because there is no statistical difference in performance between diverse-owned asset managment firms than for fims predominantly owned by white males.
In the mutual fund space, women and minorities make up just 9 percent of all asset managers. The level of diverse control is even lower when measured by AUM, with women managing 0.9 percent of the total industry AUM and minority-owned firms managing only 0.3 percent.
Hedge funds managed by diverse-owned firms represent about 8.8 percent for both groups. Women- and minority managers account for less than 1 percent of the total hedge fund industry AUM.
Among all firms managing active private equity funds, 2.1 percent of funds are managed by women-owned firms and 3.8 percent of funds are managed by minority-owned firms. Together, women- and minority-owned asset managers represent less than 5 percent of AUM in the private equity industry, Knight says.
Finally, in the real estate asset class, the research identified 11 women-owned firms and 64 minority owned firms. Together, they represent less than 3 percent of all real estate firms. Representation by AUM is even lower, with women and minorities representing about 0.3 percent and 1.5 percent of the industry totals, respectively, the study says.
The results are “troubling,” according to the Knight Foundation, which has been increasing the proportion of its female and minority asset managers who manage ts endowment. The foundation went from having women and minorities manage $7 million in 2010 to $472 million in 2016, which represents 22.5 percent of total endowment holdings.
“Diverse-owned firms are underutilized by institutional investors,” says Juan Martinez, Knight Foundation chief financial officer. “We made a conscious decision to change our approach, and we urge our colleagues to do the same.”