Funds industry criticized for lack of diversity

May 9, 2008

wall-st.jpgThe U.S. mutual fund industry is doing little to increase diversity and hire more minority workers, a senior executive at boutique investment firm Ariel Investments said this week.

“The fund industry has to make a real commitment, not lip service, to diversity. And really go out of our way to find people of color to work in our organizations,” Ariel president Mellody Hobson told Reuters in an interview on Thursday.

Ariel has long championed the cause of spreading financial literacy in the African-American community. Founder John Rogers is helping raise support and funds for Barack Obama.

“Name any well-known black portfolio manager besides John Rogers,” Hobson said on the sidelines of the annual Investment Company Institute (ICI) conference. “And, to our knowledge, I am the only black woman chair of a mutual fund board. That’s not progress,” she said. Hobson chairs the board of trustees of Ariel’s mutual funds.

Rogers is chairman, CEO and chief investment officer of Chicago-based Ariel, which had $11 billion in assets under management at the end of March.

“We, as an industry, have a very very very long way to go. And I think it’s more disconcerting when you look at private equity, when you look at hedge funds, there’s no diversity at all,” Hobson added.

Some senior executives of the $11.7 trillion U.S. funds industry agreed with Hobson’s view on the lack of diversity.

“I think it varies by the types of roles. I think among the investment management professionals, there is less diversity than all of us would like,” said Edward Bernard, vice chairman of T. Rowe Price Group

Paul Schott Stevens, president and chief executive of ICI, the fund industry’s representative body, said the challenge of increasing diversity was being felt across the whole financial sector. The ICI does not collect data on diversity in the industry.
“I hope more people of color will come and be part of our business in the future. Because certainly more and more of our investors are going to be minorities and people of color,” Stevens said.

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