Councilmember Robert White introduced a bill today to require the District to hire diverse investment consultants and fund managers to manage the city’s pension funds. The proposed law responds to concerns that the city’s lack of diverse fund managers has led to weaker financial returns.
“Diverse investment teams generate better returns on investments,” White said, citing a 2020 report from Willis Towers Watson. “Lack of diversity is costing all of us money, especially District workers, like teachers and first responders, and we need to fix that.”
The “Fund Management Diversification Amendment Act of 2021” requires the city to hire more racial minorities, women, and people with disabilities to invest our money. At least 20% of most pension funds would be managed by diverse fund managers and at least 20% of investment consultants the city uses would be diverse.
White noteda study conducted by the Knight Foundation that found that asset management firms owned by minorities and women manage only 1.1% of the industry’s total $71.4 trillion in assets under management.
“The asset management industry is decades behind the times on diversity even though diverse fund managers routinely outperform non-diverse firm managers,” said White. “The amount of money invested by our local government gives us the leverage to do what the asset management industry has not done on its own.” White added, “This bill takes seriously our social justice responsibility and fiduciary duty to District residents. The District government should hold itself to the highest standard by guaranteeing that those who manage our money bolster returns and promote diversity.”