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Page 1 U.S. SECURITIES AND EXCHANGE COMMISSION MEETING OF THE SECURITIES AND EXCHANGE COMMISSION ASSET MANAGEMENT ADVISORY COMMITTEE Via Webex Video Teleconference Wednesday, September 16, 2020 U.S. Securities and Exchange Commission 100 F Street NE Washington, D.C. Page 2 Page 4 1 PARTICIPANTS: 1 C O N T E N T S 2 2 PAGE 3 Securities and Exchange Commission: 3 Welcome and Opening Remarks 6 4 Jay Clayton, Chairman 4 Chairman Clayton; Commissioners Peirce, 5 Hester Peirce, Commissioner 5 Roisman and Crenshaw; Dalia Blass, Director 6 Elad Roisman, Commissioner 6 of the Division of Investment Management; 7 Caroline Crenshaw, Commissioner 7 and Ed Bernard, Committee Chairman 8 Dalia Blass, Director, Division of Investment Management 8 9 9 Update from the ESG Subcommittee 21 10 Panelists: 10 11 Cheryl Alston 11 Update from the Private Investments Subcommittee and 74 12 Michael Frerichs 12 Panel Discussion on Private Investment Returns 13 Anyori (A.J.) Hernandez 13 AMAC Panel Moderator: Erik Sirri, Babson 14 Bryan Jenkins 14 College and Natixis Funds, Loomis Sayles 15 Clayton Jue 15 Funds and Natixis ETFs 16 Josh Lerner 16 Panelists: 17 Michael Manning 17 Noel O'Neil, Cambridge Associates 18 Michael Miller 18 Bryan Jenkins, Hamilton Lane 19 Noel O'Neil 19 Josh Lerner, Harvard Business School 20 Ludovic Phalippou 20 Ludovic Phalippou, University of Oxford 21 21 22 AMAC Members: 22 23 Ed Bernard, AMAC Committee Chairman 23 24 John Bajkowski 24 25 Michelle Beck, Panel Moderator 25 Page 3 Page 5 1 PARTICIPANTS(CONT.): 1 C O N T E N T S (CONT.) 2 2 PAGE 3 AMAC Members(cont.): 3 Improving Diversity and Inclusion in the 4 Jane Carten 4 Asset Management Industry 187 5 Scot Draeger 5 AMAC Panel Moderator: Gilbert Garcia, 6 Michael Durbin 6 Garcia, Hamilton & Associates 7 Gilbert Garcia, Panel Moderator 7 Panelists: 8 Paul Greff 8 Michael Manning, NEPC 9 Richard Hall 9 Michael Miller, Colonial Consulting 10 Neesha Hathi 10 Clayton Jue, Leading Edge 11 Adeel Jivraj 11 Cheryl Alston, Employees' Retirement Fund 12 Ryan Ludt 12 of the City of Dallas 13 Susan McGee 13 Michael Frerichs, Illinois State Treasurer 14 Jeffrey Ptak 14 Anyori (A.J.) Hernandez, New York State 15 Erik Sirri, Panel Moderator 15 Common Retirement Fund 16 Aye Soe 16 17 Ross Stevens 17 Follow-up Discussion on the Impact of COVID-19 18 Rama Subramaniam 18 Exchange Traded Products 213 19 John Suydam 19 Operations 20 Russ Wermers 20 21 Alex Glass (non-voting) 21 Summary and Discussion 226 22 Joe Savage (non-voting) 22 23 23 Adjournment 274 24 24 25 25 2 (Pages 2 to 5) Page 6 Page 8 1 P R O C E E D I N G S 1 panelists and others presenting during today's meeting 2 MR. BERNARD: Good morning. I'd like to call 2 for your time and your willingness to share your 3 this meeting on September 16, 2020, of the Asset 3 insights with the committee and with the Commission. 4 Management Advisory Committee meeting to order. Welcome 4 Today's agenda is full and reflects both the 5 to those of you joining on sec.gov. I would note that 5 breadth of the Asset Management Advisory Committee's 6 we have a quorum. This is a virtual meeting on Webex. 6 work and the depth of analysis that your structure 7 And we've already done a sound check to ensure that all 7 allows. To that end, I look forward to presentations 8 committee members and commissioners can hear. If there 8 from two subcommittees, the ESG Subcommittee and the 9 is any problems among those who are participating, 9 Private Investments Subcommittee. I understand that 10 please send a private text to Gabe Collins or Veronica 10 both subcommittees continue to make progress on the 11 Davis, and they will help us sort it out. 11 respective workstreams and will be able to provide 12 To open the meeting, I'd like to thank 12 updates to help inform the AMAC. 13 Chairman Clayton and Commissioners Peirce, Roisman and 13 In addition, I welcome today's discussion on 14 Crenshaw for their attendance with a special welcome to 14 the impact of COVID-19 within the asset management 15 the most recent appointee, Commissioner Crenshaw, and 15 industry, which is a follow-up to the conversation the 16 invite each of them to offer any opening remarks they 16 committee began in May. Today's discussion should 17 may have. Chairman Clayton? 17 provide additional insight into these impacts with a 18 CHAIRMAN CLAYTON: Thank you, Ed, and welcome, 18 particular focus on exchange-traded products and the 19 everyone, to today's meeting of the Commission's Asset 19 industry's operations. The Commission and staff 20 Management Advisory Committee or, as we call it, the 20 continue to monitor the effects of COVID-19 on our 21 AMAC, including -- joining us virtually or listening to 21 markets, including through our market monitoring group 22 the meeting through the Commission's website. I'm very 22 and our ongoing outreach to market participants. 23 glad that the important work of the committee and, more 23 And I appreciate the opportunity for 24 broadly, the Commission has been able to continue 24 additional feedback that this discussion will provide. 25 virtually uninterrupted as we remain in our telework 25 I assure you that we are listening and we are adjusting Page 7 Page 9 1 posture. I'm very pleased to be joined today by several 1 in light of your experiences. They greatly help us. 2 of my fellow commissioners. And Ed, as you mentioned, 2 Turning to today's panelists, I look forward to the 3 I'd like to welcome Commissioner Crenshaw, who is 3 panelists' presentation regarding private investment 4 attending her first AMAC meeting as a commissioner. 4 returns. 5 Many of you likely worked with Commissioner 5 I've spoken on numerous occasions about my 6 Crenshaw during her career here at the SEC. 6 interest in promoting access and choice for Main Street 7 Commissioners Peirce and Roisman, as Ed noted, are also 7 investors, including ways we might increase their access 8 joining as well. Before I discuss today's agenda, a 8 to private markets while we ensure appropriate investor 9 number of thank yous are appropriate, first, everyone 9 protections. As part of this, we should examine whether 10 who has worked hard to make today's meeting productive 10 appropriately-structured funds can facilitate greater 11 and insightful. Thank you to the members of the 11 Main Street investor access to private investments, 12 committee, including Ed, for your continued leadership. 12 particularly as a component of an investor portfolio 13 It's greatly appreciated, Ed. 13 that is analogous to the portfolio of a well-managed 14 Thank you also to the committee members 14 pension fund. 15 serving as today's panel moderators. And I'm proud to 15 We should make sure to focus on fees and 16 say I know both of them very well, Erik Sirri and 16 investor protections. As I've said previously, one of 17 Gilbert Garcia. Thank you to the Commission staff who 17 the greatest things about our public markets is that 18 have helped with today's meeting, including Director 18 they allow our Main Street investors to invest side by 19 Dalia Blass and her staff and to all of the staff in our 19 side with sophisticated and institutional investors in 20 office of minority and women inclusion, including Robert 20 the same companies. I believe a similar result can be 21 Marchman, our senior adviser for diversity and 21 achieved through appropriately-structured funds. 22 inclusion. Robert, you're just doing a terrific job. 22 The input from today's panelists will no doubt 23 Thanks as always to the staff in the Office of 23 provide useful information for our efforts. I also 24 Information Technology and the Office of the Secretary 24 welcome your continued discussions on improving 25 for your assistance. And thank you especially to the 25 diversity and inclusion in the asset management 3 (Pages 6 to 9) Page 10 Page 12 1 industry. The discussions held at your July meeting on 1 good morning, everyone. I'm happy to attend the second 2 this topic provided a stark, honest and very helpful 2 virtual meeting of our AMAC. Thanks as always to Ed for 3 analysis of the current state of diversity and inclusion 3 his excellent leadership, to the Commission staff for 4 in the asset management industry, including 4 your hard work in preparing for this meeting and to all 5 opportunities for diverse asset managers. 5 of you on the committee for sharing your valuable time 6 That meeting clarified further that there is 6 in what I'm sure will be your thoughtful questions and 7 significant support for our shared goal of expanding 7 commentary. The committee spent its first six months 8 those opportunities and sustained interest in helping us 8 exploring a variety of timely topics. 9 determine how best we can achieve it. I'm hopeful that 9 I'm happy to see the committee now turning 10 today's panelists will help to further consideration of 10 back to focus more on some of these same topics, retail 11 this issue with an eye towards some of the best 11 access to private market investments, ESG, diversity and 12 practices observed by consultants and professionally 12 inclusion in the asset management industry and the 13 managed pension funds.