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Wanliiiigtoit, a.t. 20515
As a pait of our continued concern about the inclusion of minority- and women-owned (MWO) fiims in
the financial services industry, we are requesting an update from the Federal Retirement Thrift Investment
Board (Board) on the number of MWO investment selections offered to participants in the Thrift Savings
Plan.'
In September 2017, the Government Accountability Office (GAO) repoited that MWO asset managers
faced challenges when competing for oppoitunities with institutional investors, such as retirement plans
and foundations.2 To overcome these challenges, GAO recommended the implementation of four key
diversity practices for increasing opportunities for MWO asset managers, as follows: l) top leadership
commitment; 2) removing potential barriers, such as adjusting asset thresholds; 3) outreach, such as
connecting with MWO firms via industry and trade organizations; and 4) communicating priorities and
expectations about inclusive asset management practices. If implemented, such practices could widen the
pool of MWO asset managers and mitigate some of the barriers that MWO fiims face in competing in the
investment market.
Unfoitunately, you responded to GAO that the Board had not implemented these diversity practices and did
not have plans to do so. Although the Board rightly asseited that it has a fiduciary responsibility to limit
making guarantees about any mutual fund offerings, we agree with GAO that their recommendation does
not require the Board to provide such guarantees of any MWO mutual fund offeiing specifically. Instead,
their recommendation advises the implementation of such diversity practices to help broaden the Board's
selection and consideration of qualified MWO firms.
We require a written update, no later than April 23, 2019, on the following information about the Board's
Thrift Savings Plan investment offerings from MWO fiims, including:
1) ThenumberandnameofMWOfirmsofferedasselectionssince2015,ifany;3
2) The number and name of MWO firms that have been considered, whether offered as selections or
I For the purposes of this letter and associated requests, we define minority and women owned businesses as similarly defined
by the Government Accountability Office (GAO) in its report on diverse asset managers, GAO-17-726, INVESTMENT
MANAGEMENT: Key Practices Could Provide More Options for Federal Entities and Opportunities for Minority- and Women
Owned Asset Managers. GAO noted that ownership requirements that asset management firms must meet to be considered
minority- or women-owned vary across different institutional investors and locations. GAO relied on self-reporting or
identification by a third party of an asset management firm as being minority- or women owned.
z GAO-17-726.
3 We ask that you provide data for these enumerated requests since GAO reported on similar statics for the Board as of 2015.
Mr. Deo and Mr. Kennedy
Page 2 of 2
4) TheBoard'smostrecentpoliciesonthe'Jundselectionprocess,includinganypoliciesandpriorities
to include more MWO fiixs, if any;
5) The total number of all firms offering mutual fund selections since 2015;
6) The total number of all fiims that have been considered, whether offered as selections or not, since
2015;
7) The number and name of fiims offering mutual funds, and specifically MWO firms, that were
disqualified since 2015 and why, if any;
8) Update on the use of investment consulting firms to identify mutual fund offerings, and the extent to
which, if at all, those consulting fiims have been directed to prioritize the inclusion of more MWO
firms in their searches; and
9) Demographic infoimation (race and gender) of Board staff participating in the investment selection
process, including the Board of Directors, investment committee members, investment officer and
staff and/or investment consultants that assist with selecting firms.
Please forward these items as well as any questions about tis request to Erica Miles at (202) 225-4247.
Sincerely,
Cc:
The Honorable Patiick McHenry
Ranking Member, Cornrnittee on Financial Services