By David G. Barry
UC Investments, the investment arm of the University of
California, set out at the beginning of the year with what its chief of staff,
Dianne Klein, describes an “audacious goal”: meet with at least 100 investment
firms led by women and people of color.
Utilizing its entire 45-member team, the organization not
only met its goal by mid-April but came away with what Klein described as
“astounding” results. Namely, that of the 102 managers it ultimately met with,
UC Investments identified 18 managers with whom it is engaging in further
dialogue. There is no guarantee that it will back all 18, but it expects to
invest in at least some of them.
Klein said that “in the back of their mind,” the team thought it would be
“lucky” if it found one or two worth investing in. “Did we get one or two?” she
asked. “We got many more.”
Klein emphasized that the program was not “checking boxes or filling quotas.”
The goal, she said, is to “make money. They are not relegated to a second-tier
program. This is not charity.” She also said that the organization is far from finished
in terms of meeting with and investing in diverse managers.
UC Investments, which manages a $161 billion portfolio, was able to meet with
the managers – many of whom were in the private equity and venture capital
segments – through 25-minute Zoom meetings. Those that it liked moved onto
further in-depth and in-person meetings, Klein said.
Arthur Guimaraes, UC Investments’ chief operating officer, also speaking at the
meeting, added that “diversity drives returns, and we believe that diverse
teams perform better. We don’t believe diversity is a file or a checklist or
transitory.”
Guimaraes said the effort to meet with minority managers evolved from UC
Investments being unable to answer questions from board members related to the
diversity of its managers several years ago.
“We’re making progress,” he said, “But it’s slow.”
The university has to date invested an estimated $1 billion in diverse managers.
The meeting with 100 minority managers is just one part of UC Investments’
efforts to make the investment world more diverse.
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It also has enacted rules aimed at ensuring that minorities are interviewing
for open positions at UC Investments and also signed on to efforts to encourage
publicly traded companies to put more women and people of color onto their
boards.
UC Investments also launched Investment Academy, which is aimed at helping
women and underrepresented minorities who are in the University of California
system pursue investment careers.
Jagdeep Singh Bachher, UC Investments’ chief investment officer and vice
president of investments, said at the meeting that diversity is so important to
the system that it will be the focus of its annual report, which will come out
in September.
He said evidence of the progress that UC Investments is making on the diversity
front came through its interaction with one African-American manager. Bachher
said the manager sent him an e-mail with the subject line, “Big Fan of Yours
Jagdeep.” After his team had found that the manager was a “rock star,” Bachher
during a Zoom call asked the manager why he was a “big fan” of himself and the
UC Investments’ team – especially since he had degrees from Stanford University
and Harvard University, not the University of California.
“Why did you call me and why didn’t you call Stanford or Harvard?” Bachher
asked. Because, the manager told Bachher, “‘they won’t take my call. You have a
reputation in the market that you’ll take a 30-minute call.’”
Bachher told the board that the story reminded him that “we can’t forget our
curiosity. Even if it’s just 30 minutes. We have to keep being kids and be
curious.”