A DEI Scorecard for Investment Managers

The DEI Scorecard

Segal Marco Advisors’ Committee of Diversity Investing (CDI), comprised of eight representatives from manager research and investment consulting, worked with manager research leadership to develop and implement the DEI Scorecard.

The DEI Scorecard, which is rooted in a survey of investment managers, introduces a scoring mechanism to Segal Marco’s existing manager research framework. It awards “points” to an investment manager based on responses to a related Scorecard Survey, issued once a year. There are three central objectives of the DEI Scorecard:

• Establish a baseline tiered scoring system across strategies rated “Recommended” or “Approved.”
• Use the baseline scoring to conduct relative peer analysis of investment managers that are presently rated and under consideration for potential future client investments.
• Conduct consistent tracking and monitoring of yearly changes by investment managers.

This last objective is critical in the long run to compare aspirations to reality. Ultimately, the identifiable “score” for each asset manager allows manager research analysts to engage further regarding investment managers’ approaches to DEI, explore best practices and define objectives. Scores for asset managers are not used to rank or select managers.

The final step in the DEI Scorecard methodology is to bring together all individual scores of asset managers side-by-side in a tiering methodology, which places asset managers in one of three tiers relative to their peers within the asset class.

The DEI Scorecard has enhanced the DEI aspect of Segal Marco’s manager due-diligence process.

Summary of results

At launch in 2022, the DEI Scorecard methodology and related Scorecard Survey was intentionally limited to only the equity and fixed income investment managers rated Recommended for client investments. In total, 170 investment managers were surveyed, and 154 responses were collected, equating to a 90.5 percent response rate.

In 2023, the DEI Scorecard methodology and related Scorecard Survey was expanded to also include alternatives investment managers rated Recommended for client investments. Importantly, alternatives spans both liquid and illiquid opportunities. In total, 352 investment managers were surveyed, and 182 responses were collected, translating to a 51.7 percent response rate. Most non-responders were investment managers with alternatives strategies, and situations where the investment manager considered the requested information as protected.

The tables and graphs that follow present the results.

Note that declines between 2022 and 2023 are attributable to the larger number of managers surveyed.

What’s ahead?

The CDI is preparing the 2024 DEI Scorecard Survey. It is working with managers to develop a method of response in addition to an online survey that increases the response rate for managers that prefer not to provide responses via that format and allows for ease of information sharing. The CDI plans to have finalized responses by the end of the third quarter.

By the end of the year, Segal Marco intends to release a more detailed analysis of responses collected since inception of the DEI Scorecard methodology, evaluating trends across asset class peer groups.