Few women, minorities manage money on Wall Street, study finds

Women and minorities are locked out of some of Wall Street’s most lucrative positions, managing just 1.1 percent of the $71.4 trillion of the industry’s assets, according to a report released Wednesday.

The difficulty in attracting investments comes as firms with diverse leadership teams match, and sometimes exceed, the profits of their competitors, found the study commissioned by the John S. and James L. Knight Foundation and the Bella Research Group.

“This study, and our experience, confirm that there is no legitimate reason not to invest with diverse asset managers in the 21st century,” said Alberto Ibarguen, president of the Knight Foundation, which has an endowment of more than $2 billion.

Wall Street has long fought its reputation as a place where women and minorities struggle to succeed. In the complex world of asset management, where firms are given billions of dollars to invest by pensions, endowments and wealthy investors, the disparity is particularly stark. Only 5.2 percent and 3.8 percent of all mutual funds are owned by women and minorities, for example.

The industry’s diversity has improved in recent years, but women and minorities remain woefully underrepresented, the study found. Only one woman appeared on Institutional Investor’s Alpha magazine’s annual ranking of highest-paid managers last year. Leda Braga, who founded Systematica Investments in January 2015 and made $60 million in 2015, ranked 44th among the top 50 hedge fund managers listed by the magazine. The highest-ranked managers made more than $1 billion that year.

The disparity is likely rooted in a perception that investing with women or minorities is riskier, industry officials say. When a company or university is looking to increase its diversity, it may reflexively hire a black-owned firm for construction work but not to manage its money, said John Rogers, founder of Ariel Capital Management, the largest minority-run mutual fund firm in the U.S.

“Close your eyes and picture an investment banker and what comes back is a white male that looks like George Clooney,” Rogers said.

Women and minorities are also less likely to have the connections to raise enough money to start their own firms, officials said.

The lack of diversity also contributes to women not receiving the proper attention when investing money or planning for retirement, said Wall Street veteran Sallie Krawcheck.

“The truth is that Wall Street has done a poor job for women forever. So much so that it calls women a niche market,” said Krawcheck, who owns the Ellevate Network, a professional women’s group.