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Quarter of IMRF Assets Managed by ‘Minority-Owned’ Firms

$12.8 billion, representing 26% of the total investment portfolio, is managed by firms owned by minorities, women, or persons with disabilities

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  • Written by  Banking Exchange staff
 
 
Quarter of IMRF Assets Managed by ‘Minority-Owned’ Firms

Over a quarter of the Illinois Municipal Retirement Fund (IMRF) is managed by firms owned by minorities, women, or persons with disabilities.

As of September 30, $12.8 billion, representing 26% of the total IMRF investment portfolio across the domestic equity, international equity, fixed income, private equity and real estate asset classes is managed by a firm owned by people from a group underrepresented in asset management, which it terms ‘minority-owned’.

The IMRF announced in its board meeting that it utilizes 76 minority-owned investment management firms, including 20 woman-owned firms, 20 African American-owned firms, 19 Latino-owned firms, 15 Asian-owned firms and two firms owned by people with a disability.

Between October 1, 2022, to September 30, 2023, IMRF allocated $476 million to minority-owned firms.

Since 2002, when the IMRF committed to increase its use of minority-owned firms, the assets managed by minority-owned firms increased from $1.2 to $12.8 billion. Over the same period between 2002 and 2023, the number of minority-owned asset managers investing IMRF’s assets increased from three to 76.

The IMRF’s Chief Investment Officer serves as a member of the board for a number of organizations that aim to increase diversity, including the Women Investment Professionals (WIP) Board, the Toigo Advisory Board, and the NASP Africa Institutional Investors Advisory Council.

Dedicated Minority Programs

The IMRF has four manager of managers or fund of funds programs that commit capital on fund’s behalf and are exclusively focused on reviewing minority-owned managers for inclusion in the portfolio. In total, IMRF has committed $800 million to these managers of managers or fund of funds as of September 30, 2023.

For its international equity portfolio, IMRF hired Xponance, an African American-owned investment management firm, in 2020 to implement an international equity manager of managers program. IMRF made an allocation of $100 million to the program.

The fund also appointed Attucks Asset Management, an African American-owned investment management firm, to implement the fixed income manager of managers program. IMRF also allocated $100 million to this program.

For the fund’s real estate investments, Artemis Real Estate Partners, a woman-owned investment management firm, was hired to implement a real estate manager of managers program. This manager of managers program is constructed as an evergreen separate account. IMRF makes annual allocations to this mandate consistent with the fund’s asset allocation and it has committed $500 million to the program, as of September 2023.

The firms all have full discretion to hire managers, terminate managers, and rebalance these portfolios.

Long-term investment Programs

The IMRF adopts separate goals for increasing its use of: minority and emerging investment managers that are minority-owned businesses (13%); minority and
emerging investment managers that are woman-owned businesses (6%); and minority
and emerging investment managers that are businesses owned by a person with a disability (1%).

To ensure that progress is continuously made toward achieving its minority-, woman-, and person with a disability-owned brokerage goal, IMRF investment managers are required to report their use of broker-dealers owned by people from these groups monthly.

Managers that fail to achieve their goal during a given month must provide written notification to IMRF explaining why this goal was not achieved.

Each quarter, IMRF reviews each investment managers’ year-to-date utilization of minority-owned brokers. Penalties for not meeting the minority brokerage goals range from increased monitoring, placement on a watch list, asset reduction, termination, and exclusion from receiving additional allocations/mandates.

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