Generating more than just returns
*Source: The Knight Foundation. As of January 2019 | Ownership defined as 50% of equity or more; minorities defined as Hispanic, Black, Asian and Native American.
DEI has become a vital consideration for investors who are increasingly aiming to align their portfolios with their values. At the same time, evidence is mounting to show how considering a range of views, backgrounds and experience can help achieve long-term sustainable returns, as well as stay in line with the direction in which business is heading. Research shows that about a third of women-owned and minority-owned private equity firms are top quartile performers among private equity firms overall.*
We are committed to uncovering new and pioneering investment opportunities for our clients. We have identified the diverse manager market as such an opportunity.
Inspired by the concept of overcoming obstacles, we call our full range of research, advice and investment solutions - including a new private markets solution - the “Leap continuum.” It enables investor clients to not only explore additional return sources, but also accelerate the amount of capital being allocated to more diverse private markets investment managers.
Through the Leap continuum, our clients can combine economics with empathy and seek robust returns while making progress toward DEI goals. The deep expertise of our investments business backed by our wide-ranging specialist experience in DEI consulting differentiate us. We regularly assist clients with proactively improving DEI within their organizations, as we believe in the power of diverse teams to drive success.
Our recent white paper explores ways to design, action and implement an approach that embraces DEI across private markets. It elevates investment possibilities by shining a light on groups that may have been historically underrepresented in investments. Discover all our intellectual capital on how we believe we can help transform asset management, one individual at a time, on our “Power of change” page.
The market is moving toward DEI in portfolios. Investors have an opportunity to embrace this shift, and our Leap continuum of research, advice and solutions can help clients achieve this goal, in-line with their unique governance model and investment objectives.
Through the Leap continuum, we identify diverse managers at different stages of development, including emerging managers (firms raising their first fund), growth-stage managers (firms raising funds two through three) and established managers. We believe building a balanced portfolio across diverse firms across these stages of development has the potential to create a more diversified portfolio that can generate attractive risk-adjusted returns.
Manager selection is the critical component in managing a portfolio. But with hundreds of diverse managers in the market today, making a choice can be overwhelming. Our rigorous manager research and due diligence process seeks to identify those managers that we have a high degree of confidence will outperform in the next market cycle.
Through the Leap continuum, we can help clients to identify quality managers and, at the same time, further their DEI goals.
CIOs and investment teams must show key stakeholders — such as corporate boards, CHROs and investment trustees — that they’re proactive. They need to have a plan in place before their stakeholders compel them to act.
Being proactive makes CIOs and investment teams look good; it shows they’re taking action to address stakeholder priorities.
As part of Leap, we seek to deliver investment results for our clients while making a brighter tomorrow possible.
Through our Leap private markets solutions, we seek to identify private markets managers led by women, BIPOC* and other historically under-represented groups, including LGBTQ+, persons with disabilities and US. veterans. We draw on Mercer’s 190+ global alternatives professionals and independent investment diligence and selection process.
We aim to:
When implementing our Leap private market solutions, we generally seek to identify managers that meet one or more of the following criteria:
We can help our clients:
A diverse workforce and an inclusive culture makes us stronger as an organization and improves the quality of our work. According to data, diverse teams also deliver greater economic success.***
By understanding value and leveraging the strengths of all colleagues, we hold a differentiating advantage. Diverse teams generate richer discussions, more innovative ideas and bigger impact than teams where everyone is the same. Explore more details about Mercer’s global Diversity and Inclusion action plan which highlights our approach, strategy and actions, and commitments.
*KDMs - Key Decision Markers defined as portfolio managers and dedicated analysts who are significantly involved in an investment strategy/fund and who contribute to the investment decisions and are accountable for the outcomes of that strategy. For private markets, this will include members of the investment committee who drive investment decisions as well as members of the portfolio management team who implement them.
**BIPOC - Black, Indigenous and People of Color
- A Boston Consulting Group study found that companies with more diverse management teams have 19% higher revenues due to innovation.
- Venture capital firms that increased their proportion of female partner hires by 10% saw, on average, a 1.5% spike in overall fund returns each year and had 9.7% more profitable exits (an impressive figure given that only 28.8% of all VC investments have a profitable exit)
References to Mercer shall be construed to include Mercer LLC and/or its associated companies.
© 2021 Mercer LLC. All rights reserved.
Mercer’s research, advice and solutions described herein are for sophisticated institutional investors only. Private markets investments are speculative and involve a high degree of risk, including lack of liquidity. This information does not constitute investment advice or an offer to purchase or sell any securities.
This contains proprietary information of Mercer. Its content may not be modified, sold or otherwise provided, in whole or in part, to any other person or entity without Mercer's prior written permission.
Mercer does not provide tax or legal advice. You should contact your tax advisor, accountant and/or attorney before making any decisions with tax or legal implications.
The findings, ratings and/or opinions expressed herein are the intellectual property of Mercer and are subject to change without notice. They are not intended to convey any guarantees as to the future performance of the investment products, asset classes or capital markets discussed.
For Mercer’s conflict of interest disclosures, contact your Mercer representative or see http://www.mercer.com/conflictsofinterest.
This does not contain investment advice relating to your particular circumstances. No investment decision should be made based on this information without first obtaining appropriate professional advice and considering your circumstances. Mercer provides recommendations based on the particular client's circumstances, investment objectives and needs. As such, investment results will vary and actual results may differ materially.
Information contained herein may have been obtained from a range of third party sources. While the information is believed to be reliable, Mercer has not sought to verify it independently. As such, Mercer makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential, or incidental damages) for any error, omission or inaccuracy in the data supplied by any third party.
Not all services mentioned are available in all jurisdictions. Please contact your Mercer representative for more information.
Investment management and advisory services for U.S. clients are provided by Mercer Investments LLC (Mercer Investments). Mercer Investments LLC is registered to do business as “Mercer Investment Advisers LLC” in the following states: Arizona, California, Florida, Illinois, Kentucky, New Jersey, North Carolina, Oklahoma, Pennsylvania, Texas, and West Virginia; as “Mercer Investments LLC (Delaware)” in Georgia; as “Mercer Investments LLC of Delaware” in Louisiana; and “Mercer Investments LLC, a limited liability company of Delaware” in Oregon. Mercer Investments LLC is a federally registered investment adviser under the Investment Advisers Act of 1940, as amended. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Mercer Investments’ Form ADV Part 2A & 2B can be obtained by written request directed to: Compliance Department, Mercer Investments, 99 High Street, Boston, MA 02110.