Gender-Smart Investing Journeys: Seema Hingorani, Morgan Stanley
In her 26 years in the industry, Seema Hingorani has been CIO of the New York City Retirement Systems overseeing a (at the time) $160 billion portfolio, founded nonprofit Girls Who Invest and investment firm SevenStep Capital to address the diversity gap in investment management, and nearly two years ago joined Morgan Stanley Investment Management as a Managing Director on the senior leadership team, where she is actively involved in strategic client relationships, investment talent development and diversity initiatives across the platform. She speaks to GenderSmart about the evolution of her gender-focused investing approach and finding investment talent in surprising places.
Hingorani first realised the state of the investment industry´s diversity problem when she worked at the New York City Retirement Systems. "I was shocked by the organisational chart in [asset manager] presentations; I'd look down and say, where are all the women on your investment team?” When digging into the causes with her male colleagues and peers, every single one put it down to a lack of female applicants. This, to Hingorani, was a solvable challenge, which she voiced during keynote panels in 2014. “I said, ‘We have a serious problem in our industry, and you all tell me that you can’t find women, so I will make you a deal. I'll go find them and then you hire them.” She also acknowledged that there was another critical part of the conversation that needed to be had, “with no judging or blaming”, about unwelcoming company cultures. “If we can tackle the challenge from both ends, we'll make a lot more progress a lot faster.”
In June 2014, Seema left the New York City Retirement Systems and wrote an op-ed in Bloomberg outlining an idea for what would later become Girls Who Invest. "I just wanted to get this conversation started more broadly. What are the challenges, and what can we do about it?" The idea was to find talented young women in their high school or college years from a mix of socioeconomic and ethnic backgrounds, and then train them for a career in investment management, with a solid and supportive community to help guide them towards leadership. "I was overwhelmed with the response. I got hundreds of emails from women and men in our business, college professors and business school professors and I thought, people want me to start Girls Who Invest. That's not what I was planning to do next. But I'm clearly passionate about this. So like any good analyst would do, I started doing my due diligence."
Diversifying the Investment Industry
Hingorani realised that, while there were a number of organisations helping to get more under-represented people into the business - Toigo Foundation, SEO, the Greenwood Project - no one was focusing exclusively on women and asset management. She designed a 10 week summer program (paid for by Girls Who Invest, and funded by investment management firms to make it accessible to all), made up of four weeks of training, followed by a six week paid internship at a leading asset manager in the U.S., U.K. and Canada. As part of the program, she also introduced a speaker series where the young women could meet inspiring investors who were outside the typical industry stereotypes. "I knew we had to teach these young women core finance and investment concepts to use on the job. But there were other aspects to the program I thought we needed to do to help build up their confidence so that they would go off to their internships on investment teams and impress everybody and feel good about what they were doing." In 2015, Hingorani put out a vision called 30 by 30 - 30% of the world's investable capital managed by women by 2030. In the five years since the launch of the first Girls Who Invest flagship program in 2016, roughly 700 women have participated in the program, 70% are staying in the investment business, and 70% are women of colour.
“In the five years since the launch of the first Girls Who Invest flagship program in 2016, roughly 700 women have participated in the program, 70% are staying in the investment business, and 70% are women of colour. ”
"It's very important to me that we get great ethnic diversity, great socio-economic diversity, diversity of majors, diversity of colleges across the United States, '' Hingorani says. “I was a psychology and philosophy major at Yale, I never took a finance or accounting class until I got to business school - and I love being an investor. Great talent is everywhere."
Seema plans to keep flooding the industry with that talent, and ensure existing talent is able to progress accordingly to get the long-term systemic change needed for everyone to benefit. "We're working on continuing education content and programming, so that as our alumni become more senior, they will help change firm cultures and manage a lot of institutional capital. In order to hit 30 by 30, I knew we also had to focus on women currently in the industry in addition to the pipeline coming in. The way I always thought about that was, how do you help that analyst who's got a great track record but isn't being promoted to Portfolio Manager? Or the one who runs a $100 million portfolio which should be a billion? Women are such a hugely overlooked investment opportunity set.” Once Girls Who Invest was on a healthy trajectory, she started SevenStep Capital to intentionally invest in women who wanted to start their own alternative funds. That is how she met Daniel Simkowitz, Head of Investment Management at Morgan Stanley, where she is now a Managing Director and member of the leadership team.
Defining a Gender Lens and Shaping a New Strategy
Seema and her team are currently developing a platform to support gender-focused investment strategies, and talking to potential clients and advisors about the best approach to increase diversity in portfolio management. While the details are a work in progress, they are considering investing in emerging women private equity managers as well as direct investments in women entrepreneurs and gender-smart businesses. “It doesn't make sense to me that a woman can have an incredible performance record and make a lot of money for her investors, but then have a tough time trying to raise additional capital - this unfortunately is the case in many instances.
“It doesn’t make sense to me that a woman can have an incredible performance record and make a lot of money for her investors, but then have a tough time trying to raise additional capital”
As often happens, there is some grey area around nomenclature, and it's a conversation Seema has had with her peers about exactly what qualifies and to what extent it even matters. “Investing in a woman portfolio manager - I don't know if you would call that gender lens investing. But I can tell you that investing in women who run their own funds is a great way to diversify your portfolio and to look at differentiated opportunities which leads to market leading risk-adjusted returns.”
Does she believe that the label of gender lens investing can lead to viable opportunities getting dismissed as a niche strategy by mainstream investors? Do we need a separate label at all? “It could be [dismissed as a niche strategy]. I feel the same with ESG – I don’t think that should be its own bucket anymore. That's just good investing. Similarly, gender lens investing to me is just finding unique opportunities that others may not be looking at, but actually are hugely profitable businesses to invest in. But we still have to solve some of these big issues, so we need to keep talking about gender - and ethnicity, and socioeconomic background - for a while longer. And, again, when we talk about gender lens investing we’re not excluding men. There are men building great businesses that create products and services that help women and there are great male investors out there who are investing in women and businesses that help women. To me, this has always been a conversation between the great men and the great women in our industry. We need to partner, otherwise we’re never going to get this done.”