Through our Access To Capital Initiative, NAA collaborates with institutional investors and elected officials to increase inclusion in the management of assets by engaging diverse managers, trustees, investment professionals and consultants.
NAA believes that increasing American Latino access and control of capital provides for a more equitable involvement of our community in directing capital and other resources to address the most pressing issues facing our nation, including business development, education and wealth creation.
NAA Membership Assets Under Management Facts:
- NAA Latino asset managers in private equity represent over $40 billion in aggregate assets under management, as compared to under $500 million reported in the NAA White Paper in 2003.
- NAA membership of diverse asset management firms have almost $70 billion in AUM across asset classes.
- Twelve NAA member firms have $1 billion in AUM. Together, these firms manage over $48 billion and range across asset classes, including private equity, real estate, hedge funds and public markets.
While this signals to significant progress in the participation of Latino and diverse firms in asset management, there is a lot of advancement to be made as we consider the US Money Management capital pool of over $45 Trillion.
Recommendations to Pension Institutions on Implementation and Management of an Emerging Diverse Managers Program:
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Develop a strong emerging managers program plan with top management buy-in, clear objectives and well structured emerging manager definitions pertinent to each asset class
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Engage diverse consultants, advisors, manager of managers and fund of funds with proven track records of relationships and success in investing with Latino and emerging firms, and monitor their performance in delivering on emerging managers mandates
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Develop a cadre of diverse managers across asset classes with proven track records and /or newly-formed diverse teams that are applying prior success and experience
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Issue direct capital allocations and build direct relationships with emerging managers as a way to get to know, observe performance and practices, and identify managers that merit consideration for continued and increased allocations
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Provide adequate capital commitments to manager of managers and fund of funds vehicles that allow for larger allocations to renewed engagements, and address newly-formed firm opportunities
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Produce performance report across asset classes detailing commitment to emerging managers by segment – Latino, African American, Asian, Women, and other Emerging Managers.
Recommendation to Elected Officials on Activation in Oversight
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Establish a quarterly hearing schedule to monitor performance in engagement of emerging managers and increase transparency to the process
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Monitor and measure the level of expertise and performance of the pension’s leadership, executives and consultants on the matter of engagement of diverse managers
Implement reports to measure the current state of utilization of Latino and minority firms, and establish benchmarks to measure future performance; these should detail past, current and future engagement of Latino and minority managers across asset classes, with amount of assets allocated and management fees paid
Making The Case for Increased Diversity in Asset Management
The rise of the Emerging Domestic Market is critical to the continued growth of the U.S. economy. As the population ages and as life expectancy increases, fewer workers will be available to support each retiree. By 2050, the majority of the retired population will be non-Hispanic white, with the human capital source increasingly comprised by ethnic minorities. As the U.S. Latino population continues to grow, now exceeding 60 million and 18 percent of the population, it is critical for all institutions to incorporate the Latino market as part of their plan for growth and success. It makes common business sense to tap into the Latino consumers’ disposable income of $1.7 trillion, which aggregated to African American and Asian buying power represents a market opportunity of over $4 trillion.
Investors targeting this space can achieve attractive returns by taking advantage of capital inefficiencies in the market and the growing demand for businesses serving this space. Because these investments are made mostly in small and middle-market businesses, they provide risk diversification for investors mostly exposed to large buy-out funds, while providing access to rising managers who may develop into the fund management stars of the future.
