In recent years, minority-owned investment companies in the US have seen unprecedented opportunities along with significant risks. Identifying the best minority investment firms requires looking at factors like assets under management, investment strategies, historical performance, fees, and customer service. By partnering with top minority-owned asset managers, investors can diversify their portfolios while supporting minority communities. However, careful due diligence is necessary as the minority investment sector expands rapidly. This article will examine key factors in evaluating minority investment companies and provide actionable tips for finding the most suitable minority-owned firms to meet your financial goals.
Largest minority-owned asset managers by AUM offer scale and stability
Some of the largest and most established minority-owned investment firms can provide rock-solid stability for your portfolio. Top players include Ariel Investments, founded in 1983 and managing over $13 billion in assets, along with Piedmont Investment Advisors and Holland Capital Management with over $10 billion and $7 billion in AUM respectively. The scale and experience of these firms helps ensure effective ongoing operations and continuity of management. However, size alone shouldn’t dictate choice – smaller firms may boast specially focused investment niches or provide more personalized services.
Check investment strategies and asset class expertise when selecting
Carefully examine the investment strategies and asset class expertise of any minority-owned firm under consideration. For example, Piedmont Investment Advisors focuses on fixed income, while Holland Capital Management specializes in equity investments. Define your own asset allocation needs and risk tolerance first before selecting a minority manager aligned with your goals. Also research performance track records in niche areas of expertise – for instance, Ariel Investments stands out in managing small and mid-cap US stocks.
Compare historical returns to similar non-minority owned firms
While social impact may drive your minority investment decision, historical returns and performance versus benchmarks should still be analyzed. Top minority-owned firms can point to a long track record of outperforming non-minority competitors. For example, Ariel Investments has topped its Russell 2500 Value Index benchmark over the 1, 5, and 10 year horizons. However, a minority-owned firm with less experience may have a shorter or spottier track record, requiring closer examination.
Evaluate fee structures for minority investment managers
Pay close attention to the fee structure used by any potential minority-owned investment manager, as fees can eat away at long term compounded gains. Larger minority firms such as Piedmont Investment Advisors often have competitive fee schedules aligned with industry averages. Smaller firms just starting out may charge higher fees, sometimes justifying it through more personalized services. Make sure you understand any management expense ratios, account fees, incentive/performance fees, and other costs.
Assess customer service levels and communications
An important part of vetting minority-owned investment firms includes assessing their customer service, accessibility, and communications. Do they have dedicated personnel to answer client inquiries? Can you easily schedule calls to discuss your account? Do quarterly reports and marketing materials effectively communicate their approach? Top minority asset managers emphasize open communications and transparency – don’t settle for anything less.
Choosing a minority-owned investment company allows you to achieve diversity while supporting minority communities – but finding the right fit requires rigorous due diligence on assets, strategy, performance, fees, and service. By identifying the strongest minority managers aligned with your investment goals, you can become part of the growing movement empowering minority-owned enterprises in the financial sector.