Asset management: emerging managers.
The bill amends existing sections of the Education Code and the Government Code, establishing a new requirement for public retirement systems to provide a clear measure of their engagement with emerging asset managers. This is significant as it aims to ensure that these systems are advancing diversity and inclusion within the investment sector by actively involving firms owned by underrepresented groups. By focusing on emerging managers, the bill could facilitate a more equitable allocation of investment opportunities, potentially affecting future business practices in California's public financial sector.
Assembly Bill No. 462, introduced by Assembly Member Rodriguez, seeks to enhance the transparency and accountability of public retirement systems in California by mandating annual reports on investment management. Specifically, it requires the Board of Administration of the Public Employees Retirement System (PERS) and the Teachers Retirement Board (STRS) to report to the Legislature on their engagement with 'emerging managers' responsible for asset management, starting from March 1, 2021. This report will detail how these emerging managers are contributing to the retirement systems' investment portfolios, thereby influencing the overall investment strategy of the state’s public employee retirement funds.
The response to AB 462 has largely been positive among proponents who believe it promotes financial equity and accountability within state-managed retirement funds. Advocates argue that the focus on emerging managers can open up more opportunities for minority-owned firms in public finance, helping to combat historical disparities in access to capital. However, some skepticism exists regarding its implementation and the body responsible for defining what qualifies as an 'emerging manager', highlighting the need for clear guidelines and criteria to ensure the bill achieves its intended goals.
Notable contentions around the bill include debates on how effectively the legislative goals can be met, especially regarding the definition and measurements of 'emerging' managers. Critics have raised concerns over potential bureaucratic challenges in reporting and evaluating the success of these initiatives. The nuances involved in identifying which firms qualify as emerging managers could lead to ambiguity, warranting further discussion on how to best craft these reports to reflect meaningful engagement with diverse investment firms rather than mere compliance.