scholarly journals Race influences professional investors’ financial judgments

2019 ◽  
Vol 116 (35) ◽  
pp. 17225-17230 ◽  
Author(s):  
Sarah Lyons-Padilla ◽  
Hazel Rose Markus ◽  
Ashby Monk ◽  
Sid Radhakrishna ◽  
Radhika Shah ◽  
...  
Keyword(s):  
Hedge Funds ◽  
Private Equity ◽  
People Of Color ◽  
Financial Assets ◽  
White Led ◽  
Strongly Correlated ◽  
Racially Diverse ◽  
Barriers To Advancement ◽  
Performance History ◽  
Future Performance

Of the $69.1 trillion global financial assets under management across mutual funds, hedge funds, real estate, and private equity, fewer than 1.3% are managed by women and people of color. Why is this powerful, elite industry so racially homogenous? We conducted an online experiment with actual asset allocators to determine whether there are biases in their evaluations of funds led by people of color, and, if so, how these biases manifest. We asked asset allocators to rate venture capital funds based on their evaluation of a 1-page summary of the fund’s performance history, in which we manipulated the race of the managing partner (White or Black) and the strength of the fund’s credentials (stronger or weaker). Asset allocators favored the White-led, racially homogenous team when credentials were stronger, but the Black-led, racially diverse team when credentials were weaker. Moreover, asset allocators’ judgments of the team’s competence were more strongly correlated with predictions about future performance (e.g., money raised) for racially homogenous teams than for racially diverse teams. Despite the apparent preference for racially diverse teams at weaker performance levels, asset allocators did not express a high likelihood of investing in these teams. These results suggest first that underrepresentation of people of color in the realm of investing is not only a pipeline problem, and second, that funds led by people of color might paradoxically face the most barriers to advancement after they have established themselves as strong performers.

Finance as a driver of privatisation

2008 ◽  
Vol 14 (2) ◽  
pp. 209-236 ◽  
Author(s):  
Jörg Huffschmid
Keyword(s):  
Hedge Funds ◽  
Private Equity ◽  
Pension System ◽  
Pension Reform ◽  
Financial Assets ◽  
Social Resistance ◽  
Social Polarisation ◽  
Political Intervention ◽  
Opening Up ◽  
The Eu

This article discusses the accumulation of private financial assets and the pressure on public budgets as powerful drivers of privatisation. Financial investors are the central actors in this process, which is developing within a framework of increasingly finance-led capitalism. Financial investors are the main beneficiaries and strong promoters of the worldwide move towards pension system privatisation. With financial assets growing as a result of upward income redistribution and pension reform, traditional institutional investors are finding it difficult to generate attractive profits for their clients, and this calls for financial innovation. The activities of innovative financial investors have a twofold impact on privatisation and privatised sectors: (i) private equity firms are opening up new areas for the privatisation of public assets and services, and (ii) the ‘shareholder activism’ of hedge funds is making it increasingly difficult to meet public service obligations in privatised sectors. The EU is not countering, but rather stimulating and supporting these developments. To avoid further destabilisation and social polarisation, social resistance and political intervention are necessary, in both financial markets and public services.

The Rise of State-Owned Investors: Sovereign Wealth Funds and Public Pension Funds

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
William L. Megginson ◽  
Diego Lopez ◽  
Asif I. Malik
Keyword(s):  
Hedge Funds ◽  
Private Equity ◽  
Academic Research ◽  
Pension Funds ◽  
State Ownership ◽  
Public Pension ◽  
Annual Review ◽  
Publication Date ◽  
New Governance ◽  
Sovereign Wealth Funds

State-owned investors (SOIs), including sovereign wealth funds and public pension funds, have $27 trillion in assets under management in 2020, making these funds the third largest group of asset owners globally. SOIs have become the largest and are among the most important private equity investors, and they are key investors in other alternative asset investments such as real estate, infrastructure, and hedge funds. SOIs are also leaders in promoting environmental, social, and governance policies and corporate social responsibility policies in investee companies. We document the rise of SOIs, assess their current investment policies, and describe how their state ownership both constrains and enhances their investment opportunity sets. We survey the most impactful recent academic research on sovereign wealth funds, public pension funds, and their closest financial analogs, private pension funds. We also introduce a new Governance-Sustainability-Resilience Scoreboard for SOIs and survey research examining their role in promoting good corporate governance. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

scholarly journals INVESTMENT STRATEGIES OF INSTITUTIONAL INVESTORS: SOVEREIGN WEALTH FUNDS VS ENDOWMENTS

2013 ◽  
pp. 117-126
Author(s):  
E. S. Biryukov
Keyword(s):  
Real Estate ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Private Equity ◽  
Investment Strategy ◽  
High Yield ◽  
Income Volatility ◽  
Sovereign Wealth Funds ◽  
The World

The paper considers two main original approaches to investing the assets of institutional investors (the total amount of their assets in the world is about 100 trillion dollars) – the one of Norway's sovereign wealth fund Global and approach of Yale's endowment fund. Fund Global with assets of $ 716 billion dollars is the largest institutional investor in the world, its strategy is based on the assumption that markets are efficient and their long-term growth lies in the balance of investment in stocks , bonds, and , since more recent time - in real estate. Financiers of Yale in the 1990s revolutionized the approach to investment, firstly, by reducing the proportion of stocks and bonds in favor of private equity and real estate, and secondly , by shift from investments in the domestic market to foreign markets. Not all institutional investors are ready to follow these strategies because of the risk of negative returns in times of crises, but in the medium- and long-term, these approaches allow to beat inflation. For example, Yale's endowment has grown since 1985 to 2012 from 1.6 to 19 billion dollars, and high yield allows to transmit 1 billion dollars (!) to the budget of the university annually. Endowment funds are one of the key sources of revenues of leading American universities. Analysis of the investment policy of endowment funds and sovereign wealth funds shows that fundamental changes in the concept of investing began to occur since the late 1980s - early 1990s . Institutional investors of both these types ceased to focus on conservative instruments - bonds and deposits , and use other options: Global - stocks , Yale – private equity , hedge funds, real estate investments , etc. With the expand of the spectrum of instruments in which the funds are invested the income volatility increases either, and therefore the institutional investors should be both transparent and explain to the public the motives of investment strategy changes.

scholarly journals The Rise of Institutional Investors

2019 ◽  
Author(s):  
Jan Fichtner
Keyword(s):  
Mutual Funds ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Private Equity ◽  
Short Term ◽  
Equity Funds ◽  
Private Equity Funds ◽  
Important Position ◽  
State Street ◽  
Asset Managers

During the last decades, institutional investors gained an ever more important position as managers of assets and owners of corporations. By demanding (short-term) shareholder value, some of them have driven the financialization of corporations and of the financial sector itself. This chapter first characterizes the specific roles that private equity funds, hedge funds, and mutual funds have played in this development. It then moves on to focus on one group of institutional investors that is rapidly becoming a pivotal factor for corporate control in many countries – the “Big Three” large passive asset managers BlackRock, Vanguard and State Street.

Turning Over the Keys: Public Prisons, Private Equity, and the Normalization of Markets Behind Bars

2021 ◽  
pp. 1-11
Author(s):  
Jacob Swanson ◽  
Mary Fainsod Katzenstein
Keyword(s):  
Private Equity ◽  
People Of Color ◽  
Market Force ◽  
Traditional Role ◽  
Social Mechanism ◽  
Public And Private ◽  
Loved One ◽  
Oligopolistic Market ◽  
Economic Functioning

In recent decades, public prisons and jails have increasingly outsourced operational functions by “turning over the keys” to private business and, more recently and specifically, to private equity. By the early 2000s, private equity-owned corporations had entered the core sectors of prison and jail operations, creating “markets behind bars” in telecommunications, commissary sales, health provision, and a range of other services. Two decades later, they have become a quasi-oligopolistic market force across the carceral economy. Reacting to these developments, scholars and activists have explored how private firms generate profits by extracting resources from families of the incarcerated. Less explored is the fact that it is often and particularly private equity firms that partner with public carceral institutions in these extractive practices. In this reflection, we propose a three-part schematic for understanding how such partnerships, with their attendant predation on the poor and people of color, have become normalized. We focus, first, on the mechanism of bureaucracy through which mutual profit-making by public and private entities becomes regularized; second, we explore the legal mechanisms—the apparently small but potent and politically unexamined legal maneuvers—that enable the redirection of family resources beyond the support of a loved one to the operational needs of jails and prisons; finally, we trace the role of gender as a social mechanism through which private equity and its prison/jail partners rely simultaneously on women’s traditional role as caretaker and non-traditional role as primary breadwinner. We show that all three mechanisms are crucial to the economic functioning of the carceral state.

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