AAPIs in Asset Management: Analysis of Career Funnel Attrition & Female Representation
A report for the Association of Asian American Investment Managers (AAAIM)
Asian Americans and Pacific Islanders (AAPIs) share many challenges with other minority groups in asset management. Like other diverse communities, AAPIs face structural barriers to advancement due to existing promotional practices within established social groups. This status quo makes it difficult for high-performing minorities to integrate into the upper echelons of top firms. At the same time, AAPIs face particular forms of unconscious bias, which lead to unique and often overlooked obstacles.
A primary issue is the widespread “model minority” myth which stereotypes AAPIs as analytically-gifted hard workers. Presumably, AAPIs do not need support because they are perceived as thriving in the industry. Due to strong entry-level numbers, there is an industry-wide tendency to group AAPIs with Caucasians rather than with other minority communities in terms of population and performance data. At the same time, while “model minorities” are characterized as diligent, it is thought that they lack the strong persona to make effective leaders; as a result AAPIs are often excluded from opportunities for advancement.
This means that AAPIs notice patterns of exclusion when moving up the career funnel, but lack the data to confirm their observations. Indeed, there is a growing body of qualitative research to support these claims. But until recently there has been a dearth of quantifiable evidence to account for actual AAPI representation. This is because 1) demographic data is rarely collected, 2) DEI initiatives tend to overlook AAPI workers, and 3) when AAPIs are included in DEI analytics, that data tends to aggregate all minority populations together without parsing racial or ethnic groups.
Since 2020, The Association of Asian American Investment Managers (“AAAIM”) has worked to fill these quantitative gaps through a research partnership with Bella Private Markets (BPM). Under the leadership of Professor Josh Lerner of Harvard Business School, BPM has undertaken a series of groundbreaking studies that map AAPI representation and performance in asset management. The initial findings from that work, published in November 2020, illustrate the stark underrepresentation AAPIs experience first-hand: notably, across the four main asset classes of private equity, hedge funds, public equity, and real estate firms, AAPIs own just 3.5% of firms and 2.9% of funds, and hold only 0.7% of AUM.
This paper updates and extends that research, spotlighting two key issues: 1) rates
of AAPI representation at each stage of career progression within top-100 firms segmented by four major asset classes and 2) representation of female AAPI workers as a specific subset. While the 2020 report shows that AAPI ownership is incredibly low, this paper shines a light on where barriers to advancement occur for AAPIs and AAPI women in asset management careers. Like the 2020 report, this one is pioneering—it adds significant quantitative data points to AAAIM’s earlier survey findings, published in the 2022 report, “Beyond the Glass Ceiling: Examining the Intersectionality of Being an AAPI Woman in Financial Services.”
As suspected, this new data shows substantial drops in AAPI representation between lower and higher seniority roles in all four major asset classes. This is true when measured across a variety of benchmarks, including the United States census, percentage of business school graduates, and percentage of all positions at United States VC firms in 2020. Yet while representation decreases up the career funnel, BPM found evidence to suggest AAPI-owned funds outperform non-AAPI-owned funds across select asset classes studied. This performance data shows that diversifying investment talent and leadership is not only good for the AAPI community, it’s also good for business.
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Read the full report here.
