Impact Finance Center, in partnership with the Colorado Health Foundation, has created the Diverse Manager’s Investor Club to test the feasibility of a shared-ownership database of emerging diverse asset managers.
Studies demonstrate that funds managed by diverse asset managers often yield greater performance results for their clients than the broader market.
We plan on implementing a Shared Due Diligence Membership organization.
Here’s how it will work.
Each asset owner will commit to invest a set amount of AUM (Assets Under Management) into Diverse managers and pay a nominal annual fee over a set number of years. The annual fee would pay for the membership organization to hire analysts to perform due diligence on a predetermined number of managers each year. The due diligence packages would then be shared and owned by all of the members in the organization – saving both Diverse managers and asset owners time, money and resources to complete due diligence questionnaires for each investment.
We recognize that the members would still demand autonomy over their investment capital. Thus, the members would not be required to invest in any specific manager covered by the organization.
“This feasibility study will demonstrate the level of interest in emerging Diverse managers and their success,” said Impact Finance Center’s Jeanne Hegner. “The innovation is having a cooperative, owned by the members, doing the due diligence on the emerging managers.”
Additionally, we are testing the feasibility of a sidecar grant fund to pay for the resources the Diverse managers need to complete any additional in-depth diligence the investors require beyond the standard due diligence package determined by the membership organization.
As a preliminary step in the feasibility study, Impact Finance Center is piloting a Diverse Manager Investor Club, accompanied by a short survey to garner the interest in the membership organization.
The survey seeks to identify asset owners who are interested in this idea and gauge the general guidelines within which such an organization would operate. It is not a commitment. We are specifically interested in gauging levels of AUM commitment, years to achieve AUM commitment, annual dues, and the availability of annual grants to asset managers to support due diligence.
We will report the results of the anonymous survey, contact those who express interest in forming a working group, and keep in touch with those who are interested in joining the organization.
We are excited to build the movement to make investing in Diverse managers trust based and resource friendly to Diverse managers.