MassPRIM embraces diverse FUTURE

MassPRIM embraces diverse FUTURE
Michael Trotsky, PRIM executive director and chief investment officer

Massachusetts Pension Reserves Investment Management Board, Boston, unveiled an initiative to substantially increase its allocation to diverse and emerging managers.

The goal of the FUTURE initiative, which was presented to MassPRIM's investment committee meeting Tuesday , is to bring the pension plan's exposure to emerging and diverse managers to at least 20%.

The FUTURE initiative will also launch a new page on MassPRIM's website that will allow asset managers regardless of size or track record to submit their relevant information, which will then get tracked.

The pension fund will also partner with investment consultants and industry advocacy organizations to build MassPRIM's knowledge and network of diverse investment managers.

MassPRIM currently has about $5.3 billion, or about 6% of the fund, allocated to diverse investment managers.

"We want to make sure there are no barriers to entry for managers regardless of size, AUM or track record," said Michael Trotsky, executive director and chief investment officer of the $90 billion state plan, in a phone interview. "We're proud of the progress we've made but we're going to continue to ramp up that program."

Mr. Trotsky added that although there's currently no timeframe for when to achieve that 20%, the board plans "to make consistent progress every year."

MassPRIM is currently searching for partners who will help the plan identify and select small, emerging diverse managers for the program.

The FUTURE initiative is designed to help MassPRIM achieve the diversity goals set out by H.4887/S.2842, a bill that Massachusetts state Treasurer and MassPRIM Chairwoman Deborah B. Goldberg spearheaded and Gov. Charlie Baker signed into law in January.

"We view this legislation as a formalization of something we've already been doing," Mr. Trotsky said.

In a separate phone interview, Ms. Goldberg said that the bill "gave PRIM the green light to develop this program. So, when the bill passed, PRIM took the ball and we are running with it."

Ms. Goldberg added that since "financial services organizations have been white male bastions," it's always been "very hard to break through" for smaller asset managers or investment consultants that may not have long track records.

"And for larger funds such as ours, it's hard to take risks with firms that don't necessarily have a track record," she added.

Meanwhile, Mr. Trotsky also noted that internally, MassPRIM is focused on increasing the diversity within its staff. The state pension fund's total workforce diversity increased to 66% currently, up from 42% for the fiscal year ending June 30, 2018. MassPRIM's senior management is currently 33% diverse, up from 9% in fiscal year 2018. Women in senior management increased to 26% today from 7% in fiscal year 2018.

"All the data shows that organizations that are more diverse, have more women, have more people of color, are more financially successful," Ms. Goldberg said. "So, we are hoping to help these organizations to grow. And (in turn) they can help grow our pension fund. At the end of the day it's a win-win."

Read the original article in Pensions & Investments here.

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