Updated posts 2026
At a crucial time in America where certain communities are often overlooked, diversity is important because it allows for these groups, previously barred from the methods needed to improve financial situations, to have access to the American Dream. The Milken Institute is a nonprofit, nonpartisan thinktank with a priority of accelerating measurable progress toward that American ideal of the pursuit of happiness. Through a combined focus of financial, mental, physical and environmental health, Milken uses innovative research to develop blueprints for tackling some of the world’s most crucial global issues.
According to the Milken Institute, the low representation of women and BIPOC (Black, Indigenous, and people of color) in the $86 trillion asset management industry is a barrier to effective and ideal capital markets. The demand for equitable representation in the institutional investment industry has accelerated.
Like many academic institutions, case studies and research in business and finance are used to teach aspiring professionals methods for understanding financial profitability. The approach has always followed traditional lines which have kept a myopic view of accessibility in broadening the investment base. Through the Milken Institute’s efforts to prioritize diversity, equity and inclusion, they recognize that tried-and-true traditional methodologies have not given access to a large swathe of the population. The Milken Institute formed the Inclusive Capitalism Executive Council to re-examine and broaden the outreach for inclusivity. In December of 2022, the council released a report called The Path to Inclusive Capitalism: An Asset Owner Guide for Investment Portfolios. This report was the groundwork for the newly released companion report, Inclusive Capitalism: Seven Strategies for Specific Action in Asset Management.
The 1.4 percent figure cited below is the one that has driven most of the attention in this field, and it refers to assets under management rather than headcount. Firms owned by women and people of colour manage roughly that share of the industry’s total, a proportion that has barely shifted across a decade of study. Researchers examining why have found that the gap is not explained by performance, since diverse-owned funds perform comparably to their peers, but by how allocators screen managers — minimum fund sizes, track record requirements, and consultant relationships that systematically filter out newer and smaller firms regardless of results.
Building upon industry findings, the Inclusive Capitalism Executive Council, guided by Blair Smith, Senior Director of Financial Markets at the Milken Institute; Troy Duffie, Director of Milken Institute Finance; and Melanie Schwartz, a senior associate at the Milken Institute, created a new report intended to directly address the 1.4 percent representation of women, Indigenous, Black and people of color in the industry. It serves as a companion to the first report, laying out seven steps and value-creating opportunities designed for institutional investors, including public and private pension plans, family offices, foundations, and other allocators, to establish a commitment to diversity, equity and inclusion.
The seven core fundamentals of the report are:
1. Data metrics and tracking diversity across geographical landscapes to provide clear alignment on diversity data.
2. Expanding the talent pipeline, where studies show that increased diversity in talent selection influences performance and profitability positively.
3. Mentor and track, where adequate mentorship allows for level playing fields for individuals from all backgrounds.
4. Standardizing a governance diversity pledge, where a pledge communicates to internal and external stakeholders an organization’s specific commitment to addressing diversity.
5. Promoting diversity among asset management, which includes core examples and key themes supporting the strategic goal that inclusion enhances performance and better reflects the needs of investors, creating a more competitive supply chain while advancing equitable access to opportunities for diverse communities.
6. Standardizing a scorecard focused on inclusive capitalism, an in-depth look at organizing data metrics into a scorecard holding industry-wide institutions accountable on diversity and inclusion.
7. Convening intentionally, which focuses on the relationship between an asset owner who can invest, for example, a small portion of their portfolio with women and diverse-owned firms. Intentional spaces foster engagements that lead to better allocation than homogeneous results.
These seven principles, explored through case studies, research and analysis in Milken’s new report, aim to build a more inclusive network. Through the Milken Institute’s seven steps, a practical framework urges firms to send intentional signals to the market strengthening diversity, equity, and inclusion. In turn, the Institute’s research and reports serve as a cornerstone for equitable opportunity and upward mobility.
