{"id":2727,"date":"2022-02-21T11:28:13","date_gmt":"2022-02-21T10:28:13","guid":{"rendered":"https:\/\/a2kadvisory.com\/?p=2727"},"modified":"2022-02-21T11:56:52","modified_gmt":"2022-02-21T10:56:52","slug":"ariel-expands-into-new-fields-as-an-industry-pioneer-and-force-for-change","status":"publish","type":"post","link":"https:\/\/a2kadvisory.com\/fr\/2022\/02\/21\/ariel-expands-into-new-fields-as-an-industry-pioneer-and-force-for-change\/","title":{"rendered":"Ariel expands into new fields as an industry pioneer and force for change"},"content":{"rendered":"
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John Rogers, the founder of Ariel Investments, speaks during an August 2017 interview. The Chicago-based firm was the first Black-owned money manager at the time of its launch in 1983. Image: Bloomberg News<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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A trailblazing money manager is embarking on new territory for the firm while driving Congressional scrutiny into the largest fund firms\u2019 racial equity pledges.<\/p>

Ariel Investments \u2014 the Chicago-based asset manager led by co-CEOs John Rogers and Mellody Hobson and the first Black-owned mutual fund company at its launch in 1983 \u2014 has unveiled new collaborations in the past four months with\u00a0Charles Schwab<\/u><\/a>\u00a0and\u00a0Vanguard<\/u><\/a>. In the last year, Schwab launched the first ETF with Ariel as its sub-advisor, the\u00a0Schwab Ariel ESG ETF<\/u><\/a>, and Ariel unveiled its initial private equity\u00a0initiative<\/u><\/a>\u00a0with a commitment from JP Morgan Chase to co-invest up to $200 million in future transactions.<\/p>

At the same time,\u00a0Rogers\u2019 longtime outspoken advocacy<\/u><\/a>\u00a0for boosting the low share of assets allocated to asset managers owned by women and minorities drew the attention of the House Financial Services Committee\u2019s Subcommittee on Diversity and Inclusion, which released an unprecedented study in December\u00a0tracking the workforces and practices<\/u><\/a>\u00a0of 28 major firms. Similarly, with Schwab Asset Management launching its first ever active ETF in November and Vanguard adding Ariel last month to two other sub-advisors in a billion-dollar fund, the joint efforts reflect new aspects of existing connections among the firms, according to Bonnie Orlowski, Ariel\u2019s head of consultant relations and financial intermediaries.<\/p>

\u201cIn both cases, there’s a very long-standing relationship between our organizations,\u201d Orlowski said. \u201cWe have just a tremendous amount of respect for what Schwab and Vanguard have accomplished.\u201d<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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A thought and industry leader<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Ariel has accomplished quite a lot itself. The firm has $18.3 billion in assets under management, with a company motto of \u201cslow and steady wins the race\u201d and a logo with a turtle. As examples of the ties between Ariel and the other firms, for more than two decades Schwab and Ariel have\u00a0conducted<\/u><\/a>\u00a0annual surveys comparing the investing views and habits of Black and white Americans. With Vanguard, Hobson has told Orlowski that she\u2019s been engaging with research teams \u201cliterally her entire career,\u201d Orlowski said in an interview.<\/p>

Rogers is the son of a Tuskegee Airman and the first African American woman to graduate from the University of Chicago Law School, and he has been a\u00a0long-admired figure<\/u><\/a>\u00a0for younger Black professionals. He\u2019s led the way his entire career in calling for the industry to lift the\u00a0current level<\/u><\/a>\u00a0of 1.4% of asset managers\u2019 assets that\u2019s allocated to women- and minority-owned firms. At the subcommittee hearing about its report on the topic in December, Chair Joyce Beatty mentioned Rogers as one of the inspirations for the research into hiring, contracting and board diversity.<\/p>

\u201cThese findings reinforce what we heard in that initial hearing last Congress from John Rogers, who sat where you’re sitting now to testify, when he said we must tackle inequality through business opportunity,\u201d said Rep. Beatty, a Democrat from Ohio. \u201cWhile this report and hearing will not transform the industry overnight, we seek to bend the arc of progress and expand employment and business opportunities for both men and women and minorities by opening eyes and drawing attention to the glaring inequities in this corner of our society.\u201d<\/p>

In his\u00a0written<\/u><\/a>\u00a0testimony at the prior hearing in June 2019, Rogers said the low share of assets managed by minority and women-owned firms has come as a result of \u201ca tendency to work with people you know and with whom you are comfortable\u201d and unconscious bias.<\/p>

\u201cThird, many banks, corporations and nonprofits have embraced well-intentioned supplier diversity programs emphasizing construction, catering, janitorial services and other commodity-related fields,\u201d Rogers said. \u201cHowever, this approach excludes us from the parts of the economy where wealth, power and jobs are created today, such as asset management and other professional services. I would go as far as calling it a modern-day Jim Crow.\u201d<\/p>

Rogers praised Hobson as one of the leaders helping to change the industry. Ariel appointed her its co-CEO in 2019 after she spent nearly 20 years as its president. Hobson currently serves as the chair of the board with Starbucks and as a director with J.P. Morgan after prior tenures as chairman of DreamWorks Animation\u2019s board and a member of Est\u00e9e Lauder Companies\u2019 board.<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Ariel Investments co-CEO Mellody Hobson posed for a picture in September 2017. She has worked for the firm for three decades. Image: Bloomberg News<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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New business areas<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Last February, the firm\u00a0opened<\/u><\/a>\u00a0Ariel Alternatives, which is a PE firm investing in companies with $100 million to $1 billion in annual revenue under what it calls \u201cProject Black.\u201d Ariel Alternatives had $873.7 million in assets by the end of last year, according to the firm. The Ariel initiative will invest in businesses owned by Black and Hispanic entrepreneurs and other firms that will become certified minority business enterprises.<\/p>

\u201cThis scale \u2014 which heretofore has been largely absent among minority-owned businesses \u2014 will enable these enterprises to compete on the same footing with Tier 1 suppliers,\u201d Hobson\u00a0wrote<\/u><\/a>\u00a0in a letter to Ariel\u2019s investors. \u201cThe key point here is that Project Black leverages existing corporate spends \u2014 what Fortune 500 companies are already doing \u2014 in a way that can help narrow the wealth gap in underrepresented communities. We are helping to nurture a virtuous circle of spend and build. By spending with firms owned and run by people of color, big business is able to simultaneously help foster and elevate our communities. This is a powerful dynamic.\u201d<\/p>

The Schwab-Ariel product is a semi-transparent ETF with a focus on small- and midsize equities rather than the growth and large-cap securities often included in funds using ESG criteria. With an operating expense ratio of 59 basis points, the fund screens out companies who get their main sources of revenue from tobacco, fossil fuels, private detention firms and weapons manufacturers.<\/p>

\u201cOur first proprietary ESG fund addresses a clear gap in the market for a small- to mid-cap ESG fund managed through a value investing lens,\u201d Malik Sievers, Schwab\u2019s head of ESG strategy, said in a statement. \u201cWe are excited to bring investors a new option for incorporating ESG into their portfolios and which may help them to tailor their exposure to ESG investing based on their goals and preferences.\u201d<\/p>

Vanguard\u2019s collaboration with Ariel added it to the group of active managers tapped by the passive investing pioneer that also has more than $1.8 trillion in active assets. Alongside existing sub-advisors Cardinal Capital Management and Frontier Capital Management, Ariel is now helping to manage the Vanguard Explorer Value Fund, which has $1.2 billion in assets. In the initial phase of the collaboration, Ariel will oversee 10% of the fund\u2019s assets.<\/p>

\u201cVanguard continuously seeks out leading investment firms that demonstrate the expertise, diversity of thought and accountability needed to drive successful outcomes for investors,” Dan Reyes, head of the firm\u2019s Portfolio Review Department, said in a statement. “We believe that Ariel’s talented portfolio management team and patient approach to investing complements the fund’s strategy and existing advisors.\u201d<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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A long track record into the future<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Orlowski, the firm\u2019s head of consultant relations and financial intermediaries, works with institutions and buyers who act as gatekeepers for large wealth managers. While she has limited interactions with advisors, Ariel\u2019s mutual funds are \u201cpretty widely available\u201d through the major wealth managers, Orlowski said. With only about 100 employees across the firm, Ariel won\u2019t be calling advisors\u2019 practices and bombarding them with LinkedIn messages.<\/p>

\u201cWe’re a smaller firm,\u201d she said. \u201cWe don’t have the luxury of an army of wholesalers engaging with advisors.\u201d<\/p>

This past November brought the 35th anniversary of the launch of Ariel\u2019s flagship Ariel Fund, where Rogers remains the lead portfolio manager. From its inception through October 2021, the fund has an annualized return of 11.60%, and it\u2019s one of only 63 mutual funds that have track records of more than three decades.<\/p>

\u201cAs we have mentioned on many occasions: Anyone can get lucky over the short term; real skill shines through over time,\u201d Hobson\u00a0said<\/u><\/a>\u00a0in a letter to the firm\u2019s investors marking the occasion. \u201cAs we sit here 35 years later, we are pleased with these results but not taking any victory laps. The stock market keeps us humble, and our race has no finish line.\u201d<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Source: financial-planning.com<\/a><\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"

John Rogers, the founder of Ariel Investments, speaks during an August 2017 interview. The Chicago-based firm was the first Black-owned money manager at the time of its launch in 1983. Image: Bloomberg News A trailblazing money manager is embarking on new territory for the firm while driving Congressional scrutiny into the largest fund firms\u2019 racial 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Ariel expands into new fields as an industry pioneer and force for change<\/a><\/blockquote>