Taffi Ayodele, Director of Emerging & Diverse Manager Strategy at the NYC Comptroller’s Office, discusses how New York City is leading the charge in advancing diversity in asset management. With the launch of the inaugural Emerging Managers Week, the office has created a groundbreaking platform to connect emerging and MWBE-owned asset managers with institutional investors, fostering greater inclusion in financial markets. Ayodele highlights how integrating diversity, equity, and inclusion into investment decisions strengthens financial performance—diverse managers in NYC’s pension system have outperformed benchmarks by 5% since 2015. She also shares insights on balancing short-term returns with long-term impact and the Comptroller’s ambitious goal of having 20% of investments managed by MWBE firms by 2029.

Today marks the kickoff of the inaugural Emerging Managers Week, led by NYC Comptroller Brad Lander and other pension systems. Tell us more about this initiative and how it is centering access to capital.

“This year, we proudly launched the first coordinated, multi-state ‘Emerging Managers Week.’ This initiative is dedicated to assisting pension funds like ours in investing with emerging asset managers, many of whom are MWBE-owned, in alignment with our fiduciary duty. The Comptroller’s Office Diverse and Emerging Managers Conference alone, attracted nearly 900 attendees. Over the course of the week, managers had the chance to meet with nine different LPs, as well as consultants and Funds of Funds representing well over $1 trillion in assets under management. We recognize that managers spend a lot of time on the road, so we designed this trip to New York to maximize value and engagement—and the initial feedback has been overwhelmingly positive. At the New York City Comptroller’s Office, we remain steadfast in our commitment to this work, and it’s heartening to see others share this dedication.”

As the Director of Emerging & Diverse Manager Strategy, how do you ensure your investment decisions are not just about financial returns but also about building a more inclusive and equitable future? What does that look like in action?

“Our primary responsibility is to execute an investment strategy that aligns with our fiduciary duty, but this does not conflict with fostering an equitable future. We believe that both objectives are achievable and integrate a values-driven approach through our comprehensive ESG program. Inequity itself poses a significant investment risk; by denying access to opportunities for everyone, we stifle innovation. As a pension system, we depend on the performance of our best-in-class asset managers to fulfill our promise and obligation to provide our pension plan participants with robust returns.”

NYC is a diverse financial hub – how do you use your unique position to create new opportunities for emerging and diverse managers, and what’s the secret sauce to ensuring they succeed in such a competitive space?

“New York City’s rich diversity and status as a global financial center position us uniquely to champion emerging and diverse managers. We actively seek out and engage with MWBE asset managers by providing them with opportunities to manage portions of our pension funds. Our approach includes hosting events like the Emerging Managers Conference, where we facilitate direct interactions with key decision-makers. In addition, our emerging manager program partners offer capacity and skill-building workshops—and this year, for the first time, we introduced an emerging manager bootcamp along with two highly attended skill-building sessions at our conference. The ‘secret sauce’ lies in our acknowledgment that while we might not have every resource an emerging manager needs, our role is to help them navigate the broader emerging manager landscape by connecting them with critical networks and opportunities. This free assistance is crucial for managers who might otherwise struggle to gain traction, anchoring their long-term success.”

How do you balance the pressures of short-term performance with the long-term benefits of investing in diversity, equity, and inclusion? What wins have you seen from this strategy that make it worth the investment?

“Balancing short-term performance pressures with the long-term benefits of DEI requires a disciplined and holistic investment approach. We conduct rigorous due diligence to identify managers who demonstrate both strong performance and a commitment to DEI principles. Our experience has shown that diverse teams often bring unique perspectives, leading to innovative solutions and ultimately superior returns. In fact, since 2015, diverse managers in the NYC Retirement Systems Pension Funds have outperformed their benchmarks by 5%, demonstrating the clear financial advantages of an inclusive strategy.

Looking ahead, what initiatives or opportunities is the NYC Comptroller’s Office most excited about?

“We are thrilled to continue expanding our diverse and emerging managers program. In 2023, we announced our goal to have 20% of our investments managed by MWBE-owned asset managers by 2029. We’ve already witnessed significant progress, with assets under management by MWBE firms increasing from $16.8 billion in FY22 to $23.1 billion in FY24—a 37.5% growth during Comptroller Lander’s tenure. This trajectory not only demonstrates our unwavering commitment to diversity and inclusion but also highlights the tangible benefits of such investments for our pension system and its beneficiaries.”

Charting the Course is a monthly series featuring interviews with partners and investors in the Compass Investors network about how they are charting their course to create impact, manage long-term risk, and strive for a more just and humane world.