Presented by Henry Cisneros

1
EXPANDING INVESTMENT OPPORTUNITIES THROUGH
DIVERSITY
Presented by Henry Cisneros CalPERS and CalSTRS
Conference San Jose, California April 25, 2006
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21st Century Themes

• Life at Hyperspeed
• Interconnected by Computers and Multi-media Tools
• Biotechnology Marvels
• Aging of Traditional Population
• Globalization

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Fundamental Demographic Shifts
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Population Distribution
Source U.S. 2000 Census U.S. Census Bureau
Population Division, Population Projections of
the U.S., Total Population by Race, Hispanic
Origin, Nativity
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African-Americans

• 34.65 million
• 1990-2000 16 growth

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Growing Influence on U.S. Culture

• Fashion Trends
• Language and Culture
• Music
• Religion Philosophy
• Sports

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Profound Influence on U.S. Culture
National Icons
Oprah Winfrey
Bill Cosby
Shaquille ONeil
Cultural Pacesetters
Denzel Washington
Toni Morrison
Halle Berry
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Profound Influence on U.S. Culture
Athletic Heroes
Tiger Woods
Tim Duncan
Michael Vick
Ken Griffey
Classical Grace
Wynton Marsalis
James Earl Jones
Leontyne Price
Jessye Norman
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Profound Influence on U.S. Culture
Moral Philosophy
e
Cornel West
Public Leadership
Jesse Jackson
Colin Powell
Condoleezza Rice
Barack Obama
10
Asian-Americans

• 10.2 million
• 1990-2000 41 growth
• Highest Median Household Income

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Growing Influence on U.S. Culture

• Cuisine
• Architecture
• Design Aesthetics
• Pacific Rim Commerce
• Literature, Religion and Philosophy
• Fashion

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Growing Influence on U.S. Culture
Arts and Literature
I.M. Pei
Maya Lin
Amy Tan
Deepak Chopra
Entertainment and Fashion
Yo Yo Ma
Vera Wang
Bruce Lee
Jackie Chan
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Growing Influence on U.S. Culture
Media and Business
Connie Chung
Ann Curry
Charles Wang
Sports
Michelle Kwan
Michael Chang
Kristi Yamaguchi
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Hispanic-Americans

• 35.3 million
• 1990-2000 58 growth

Source April 1998, Standard Poors DRI
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Increasing Influence on U.S. Culture
Music
Movies
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Increasing on U.S. Culture Influence
Sports
Arantxa Sanchez-Vicario
Alex Rodriguez
Sergio Garcia
Oscar de la Hoya
Literature
Gabriel Garcia Marquez
Isabel Allende
Sandra Cisneros
Carlos Fuentes
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Increasing Influence on U.S. Culture
Fashion
Paloma Picasso
Oscar de la Renta
Carolina Herrera
Public Leadership
Mel Martinez
Ken Salazar
Carlos Gutierrez
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California Population by Race / Ethnic
Distribution
Source Public Policy Institute of California
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Population Pyramids for Anglo and Hispanic Ethnic
Groups in Texas, 2000
Anglo
Hispanic
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Minority Populations Are Young
of population under 20
Source Market Segment Research Population
Report, Middle Series, 1996
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Minority Households Are Larger

• Whites Blacks Hispanics
• Household
• Size 2.58 2.75 3.54

Source 1998 Current Population Survey
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Over 249,000 --31-- come from Spanish-speaking
countries
Source U.S. Dept of Justice, Immigration and
Naturalization Service, Annual Report, Jan 99
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Over 194,000 --24-- come from Asian countries
Source U.S. Dept of Justice, Immigration and
Naturalization Service, Annual Report, Jan 99
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Source U.S. Dept of Justice, Immigration and
Naturalization Service, Annual Report, Jan 99
25
Source U.S. Dept of Justice, Immigration and
Naturalization Service, Annual Report, Jan 99
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MythThe Minority Market Is Small and Hence
Is Not a Significant Factor for Business to
Consider.
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There Is Still a Significant Gap in the Rate of
Home Ownership
Home Ownership Rate
Source Department of Housing and Urban
Development Office of Policy Development
Research, US Housing Market Conditions, 4th
Quarter 2001
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Projected Owner Occupied Household Growth in
Millions 2000 - 2010

• African Asian/ Total
• Total American Hispanic Other Minority
• 10.9 m. 1.8 m. 2.2 m. 1.0 m. 5.0 m.

Source 1998 Current Population Survey
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Minorities Account for 41 of All New
Homeownership
Source Department of Housing and Urban
Development
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Top 10 Surnames of California Homebuyers

• Garcia Martinez
• Smith Lee
• Lopez Johnson
• Rodriguez Gonzales
• Hernandez Williams

Source American Demographics, June 1998
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MythIt Will Be a Long Time Before Minorities
Will Be a Viable Middle Class.
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Growth of the Middle Class
Total Households
African American Households
Hispanic Households
Asian Households
Middle Class Defined
1989 23,663 - 36,201 1999 33,001 - 52,174
Source U.S. Census Bureau
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Fact Minority Families Have More Workers Per
Household
Households with Three or More Workers, The
Middle Class - 5 County Area
Source Pepperdine University Institute for
Public Policy The Emerging Latino Middle Class
1997
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Americas Leadership Institutions Must Recognize
The Importance Of Diversity
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I. Generate Investment Returns

• Market Opportunities
• Minority driven Growth
• Key Industry Impacts

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• Consumer Goods
• food
• clothing
• children needs
• family staples

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• Transportation
• automotive sector
• airlines

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• Health Care and Personal Services
• pharmaceuticals
• medical services
• senior care

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• Housing and Accessories
• real estate
• homebuilding
• rentals
• furniture
• household appliances

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• Information and Entertainment
• telecommunications
• electronic products
• radio and television broadcasting
• live entertainment

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• Financial Services
• banking services
• investment products
• remittances

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Major Companies are Deciding as Policy and
Practice That They Will Creatively Address
Diversity

• It is a Growth Imperative
• Organizational Attitudes Must Reflect That
  Recognition
• Practices Procedures Must Support It

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Companies are Developing Appropriate Products and
Accessible Services

• Calibrate Products to the Market
• Refine the Message
• Locations Community Accessibility

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Companies are Staffing and Training for Diversity

• Bilingual Staffing
• Training and Orientation on Attitudes and
  Procedures
• Efforts at Cultural Understanding
• Entrepreneurial Outreach

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Companies are Communicating With Phases of Life
in Mind

• Refine and Target the Message
• Choose the Most Appropriate Communication Mediums
• Address Language
• Emphasize Aspirational Content

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Companies are Investing in Financial Education to
Create Economic Opportunity for the Long Run

• Educate Minorities About Financial Prerequisites
• Stress Credit Record Preparation
• Teach, Persuade, Explain

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Companies are Addressing the Special Needs of
Immigrants

• Basic Explanatory Materials
• Contrast to Systems in Home Countries

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Companies Recognize that the Time Frame Is
Immediate

• Performance Objectives
• Trends are Accelerating

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II. The Investment Sector Must Prepare the
Infrastructure of the Investment Business
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• 1. Direct rigorous analysis of trends,
  industry sectors, and positioning

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• Staffing
• Pipeline from higher education

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• 3. Stable of Managers
• - Experience - based knowledge
• - Differentiated market penetration
• - New networks

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• 4. Institutional Transactions
• Support firms

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• 5. Industry Alliances
• - Economic research and documentation
• - National networks for action

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III. Build the Next American Consumer Base

• Financial Education
• Education and Training
• - Access to Higher Education
• Support Public Policies to Expand the Middle
  Class
• - Job Generation
• - Incomes
• - Healthcare
• Support Asset Accumulation Strategies
• - Homeownership
• - Investment initiatives
• - Entrepreneurship

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Alternative Long Term Views of the Investment
Sectors Interests

• Pay Now or Pay Later

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Invest Now and Build on that Platform Indefinitely

• - Enhanced Tax Returns
• - Reduced Costs of Dependence
• - Expanded Wealth Base
• - Powered by Breakthrough Industries
• - Driven by the Human and Economic Capital
  of Emerging Populations