It could be the long-awaited turning point in the world of venture capital and beyond. Yale, The $ 32 billion foundation has been run by legendary investor David Swensen since 1985. Just let its 70 U.S. money managers across asset classes know that diversity is now a priority for the school.
According to the WSJ, Swensen has told companies that from now on they will be measured annually on their progress in increasing the diversity of their investment workforce, from recruiting to training to mentoring and retaining women and minorities.
Those showing little improvement can see the prestigious university pulling their money, Swensen tells the outlet.
It's hard to overestimate the importance of moving. Though Yale's foundation assets performed atypically poorly over the past year, Swensen, 66, is one of the most respected money managers in the world. As a 31-year-old former student at the school, Yales Foundation's assets rose from $ 1 billion. to the second largest school equipment in the country after Harvard, which currently manages $ 40 billion.
Swensen was blamed for developing what is known as the Yale model, which lacks public stocks and lacks exposure to venture shops, private equity funds, hedge funds and international investment previously, including the current Princeton Foundation directors, Stanford and the University of Pennsylvania.
It is not difficult to imagine that these managers and many others will follow Swensen's decision again, inspired by the growing diversity with Yale itself. Should such metrics become the standard, they could dramatically change the persistently persistent world of money management, which remains predominantly white and predominantly male.
While the shortage of women and minorities in the ranks of venture firms may not be news to readers, a 2019 study commissioned by the Knight Foundation and cited by the WSJ underscores how big the problem remains across asset classes . It found that women and minority companies owned less than 1% of the assets managed by mutual funds, hedge funds, private equity funds and real estate funds in 2017, although their performance was comparable to such companies.
As for why Swensen didn't write this letter to the Yale-backed universe of fund managers much earlier, Swensen tells WSJ that he had long spoken to them about diversity but held back due to a belief in systematic change in part there weren't enough diverse candidates entering wealth management.
Inspired by the Black Lives Matter movement, which gained momentum this spring, he decided it was time to take the plunge anyway.
As for perceived pipeline concern, fund managers need to find out. Swensen has reportedly made a proposal to the same US executives. He suggested they forget the same résumés they've been looking for and consider recruiting directly from colleges.