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10 Fantastic Funds With Diverse Leadership

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24.06.2021

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The financial services industry is known for being monochromatic.

White men represented 60% of senior-level management in the industry in 2018, according to research released by the U.S. Government Accountability Office earlier this year.

The palette is even more bare on the asset management side. According to the John S. and James L. Knight Foundation's most recent "Diversifying Investments" report, released in 2019, minority- or female-owned firms accounted for a mere 0.9% of total assets under management (AUM) in 2017.

It's not for lack of performance. The report showed zero discernable difference between the performance of woman- and minority-owned funds and that of non-diverse owned funds.

At a time when investors are increasingly seeking out positive change by choosing to own funds and with environmental, social and governance (ESG) criteria, how can most of the assets still be managed by white men?

If you really want to invest for social change, pay attention to who is running the mutual funds and exchange-traded funds (ETFs) you buy. Even if these funds aren't centered around ESG or socially responsible investing (SRI) criteria, supporting diverse portfolio managers can help move the bar within the financial industry.

Here, we highlight 10 funds ran by a diverse group of portfolio managers. They show just how easy it is to invest for diversity without sacrificing results.

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The Vanguard Total World Stock ETF (VT, $102.97) is a perfect example of diversity in familiar places. The fund, which offers one of the most diverse portfolios in the fund industry, has been co-managed by Christine Franquin since 2013.

"There's a myth that index portfolio management is just pushing a button to track an index," Franquin says. "In reality, it is much more challenging, but it's a challenge that I enjoy."

With over 9,000 holdings of companies located in 47 countries in the VT portfolio, managing the fund requires a truly global mindset and understanding of many different markets, she says. It's also a collective effort between herself and experts in Vanguard's London and Australia hubs.

The fund is up 12.1% for the year to date, and averaged an annual return of 11.4% between 2013 and 2020 – on pace with its benchmark, the MSCI ACWI Index.

Learn more about VT at the Vanguard provider site.

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The four-manager team on the T. Rowe Price QM U.S. Small & Mid-Cap Core Equity Fund (TQSMX, $20.07) is an example of diversity at work.

The fund is co-managed by Prashant Jeyaganesh, Vidya Kadiyam, Navneesh Malhan and Sudhir Nanda, who collectively have 55 years of industry experience under their belts. Kadiyam and Malhan are recent additions to the team, but Jeyaganesh and Nanda have been managing it since 2017.

"Having worked in different kinds of jobs and in two countries helps me look at things from multiple different angles," Nanda says. He grew up and completed his undergraduate and graduate education in India, where there are many different sub-cultures and over 20 languages spoken. As a result, he says he also has "a fair bit of understanding of different cultures and can work with diverse groups of people."

Jeyaganesh, who is of Indian descent, agrees: His cultural background and engineering degree have helped him understand other viewpoints as a portfolio manager.

The team takes a quantitative management........

© Kiplinger


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