BOSTON–(BUSINESS WIRE)–NEPC, a leading research-driven investment consultant with $1.3 trillion in AUA today unveiled The Explorer Program, a platform to identify, meaningfully explore and engage with diverse-owned and -led investment management firms who are not currently 1- or 2-rated by NEPC. Once in the program, the NEPC Research team will consider these diverse managers for inclusion in client portfolios and for future inclusion on the firm’s Focused Placement List (FPL), which is comprised of top-ranking 1-rated managers.
“We are intentional about our engagement with diverse managers,” said Will Forde, Principal and Senior Consultant at NEPC and member of the firm’s Diverse Manager Committee. “Several studies have shown that diverse investment managers often earn better results for their clients than the market more broadly. That’s partly why The Explorer Program is so necessary, it will increase the number of NEPC’s rated diverse strategies by approximately 30%, allowing our clients to choose from a stronger set of options.”
The Explorer Program was unveiled at NEPC’s annual Equitable Manager Participation Workshop, an event that seeks to further expand NEPC’s network of diverse managers through meaningful discussions and engagements.
As part of this program, each researcher on the Marketable Securities team will source at least one Explorer strategy within their asset class area of coverage. Like FPL strategies, Explorer strategies will be fully vetted and approved by NEPC’s Due Diligence Committee and/or Alternative Asset Committee. The vetting of Explorer strategies is consistent with the firm’s standard framework for investment strategy due diligence.
Explorer strategies will have comparable characteristics to FPL firms and strategies but may differ in some ways, including lower assets under management, shorter track records, limited back office resources, higher fees and a unique investment approach. The NEPC Research team will conduct annual reviews of the program to identify those diverse strategies ready to migrate to the firm’s Focused Placement List.
The idea for The Explorer Program was directly inspired by the specific goals set forth in NEPC’s Diverse Manager Policy 2.0, which outlines the firm’s short-term and long-term goals for increasing NEPC’s engagement with diverse managers. Two key goals of this policy were to increase the number of meetings with diverse firms by 10% in 2020 and for diverse managers to represent 10% of managers on the firm’s Focused Placement List by the end of 2021.
NEPC’s first annual Diversity, Equity and Inclusion (DEI) Progress Report, the first comprehensive DEI report of its kind from an investment consultant, illustrates how NEPC is achieving those publicly-stated goals on expanding engagements with diverse-owned and diverse-led investment managers.
“NEPC’s ongoing commitment to identifying and supporting diverse-owned and -led investment managers reflects our view that diversity, equity and inclusion will drive long-term success in our business as well as the investment industry, more broadly,” said Chenae Edwards, Partner at NEPC and co-chair of the firm’s Diversity, Equity and Inclusion Network. “Institutional investors have taken important steps to increase their engagement with diverse managers in the last year. However, there is more progress to be made and The Explorer Program is designed to fuel that progress. As a firm, NEPC will continue pushing for radical transparency and accountability around diversity, equity and inclusion throughout the entire investment industry.”
The new Explorer Program is a product of thoughtful collaboration between NEPC’s Research team and the firm’s Diverse Managers Committee, which consists of senior consultants and senior research professionals specializing in public markets and alternative investment strategies.
To learn more about NEPC’s DEI programs, click here or read this report.