Baltimore City Pension Fund Prioritizes Performance and Diversity in Asset Manager Selection

The Baltimore City Employees' Retirement Systems is placing a strong emphasis on both performance and diversity when selecting asset managers, according to Executive Director David Randall. Speaking at Meketa Investment Group's 14th semiannual Public and Private Markets Emerging & Diverse Manager Research Day on April 26, 2023, Randall explained that the pension fund aims to align its investment approach with the city's inclusive mission.

While the pension fund does not have a formal "etched-in-stone" program for hiring diverse managers, it has been actively promoting diversity. Randall stated that the pension fund has taken concrete steps to advance diversity, such as hiring an international equity manager and requiring them to allocate funds to 10 different diverse sub-managers, while only paying the main manager. This approach allows the pension fund to support diverse talent without incurring additional costs.

Another strategy the pension fund has considered is committing to non-diverse-owned firms that offer diverse products. By investing in these products, the pension fund can indirectly promote diversity in the asset management industry. Randall emphasized that the pension fund wants to look beyond just a diverse program and consider the broader impact on the community and its members.

Why this matters: The Baltimore City Employees' Retirement Systems' focus on diversity in asset manager selection reflects a growing trend among institutional investors to align their investments with social and inclusive goals. By prioritizing both performance and diversity, the pension fund seeks to generate strong returns while supporting underrepresented groups in the financial industry.

Randall's comments highlight the pension fund's commitment to promoting diversity and inclusion in its investment decisions. "The pension fund has taken steps to promote diversity, such as hiring an international equity manager and requiring the manager to hire 10 different diverse managers, while only paying the main manager," Randall stated. As the Baltimore City Employees' Retirement Systems continues to navigate the investment landscape, its approach serves as an example of how institutional investors can balance financial objectives with social responsibility.

Key Takeaways

• Baltimore pension fund emphasizes performance and diversity in asset manager selection.
• Pension fund hires diverse managers without incurring additional costs through sub-manager allocation.
• Pension fund invests in non-diverse firms offering diverse products to promote industry diversity.
• Pension fund aims to align investments with city's inclusive mission and support underrepresented groups.
• Pension fund's approach serves as an example of balancing financial and social responsibility objectives.