Funds place Ariel Investments on watch amidst staff turnover, poor performance

As Ariel Investments’ private equity arm refuses to stay neutral while workers unionize, the firm is facing major scrutiny from investors over staff turnover and poor performance. Ariel Investments is the majority owner of Sorenson Communications, a provider of Video Relay Service (VRS) for Deaf and hard-of-hearing communities. American Sign Language (ASL) interpreters at Sorenson are organizing a union with the Office and Professional Employees International Union (OPEIU) to improve insufficient wages and working conditions and to improve a vital service to the Deaf community. Ariel and Sorenson have stated that they are “working to remain free of third-party representation,” rejecting workers’ request for a neutrality agreement. This anti-union position contradicts Ariel’s reputation for progressive thinking and positive impact investments that both support diversity and minority owned businesses.

In April, Ariel Investments announced that eight employees, including three senior executives, planned to retire as the firm struggled to provide returns for investors. John Miller, co-manager of Ariel’s Small/Mid Cap Value portfolios, and Cheryl Cargie, head domestic trader, were among those that accepted the firm’s offer for early retirement.

Chairman and CEO John Rogers admitted that the firm “had a real tough year,” with assets falling to $12.9 billion in April 2025 from peaking at $18.3 billion in 2021. A PESP analysis found that Ariel’s mutual funds, which are marketed to both institutional investors and retail investors, have suffered from significant performance issues. 

Since the announcement, two additional Chicago pension funds have decided to add the firm to the watch list: the Municipal Employees Association Benefit Fund (MEABF) and the Metropolitan Water Reclamation District Retirement Fund (MWRDRF). In May, the MEABF board unanimously voted to put Ariel on its watch list “for organizational/performance reasons” at the recommendation of investment staff and the fund’s investment consultant, Marquette Associates. MEABF documents state that firms on the list are monitored closely, and can be added for a list of reasons including “poor performance of account relative to stated goals and objectives over a market cycle” and “changes in key personnel.” Two weeks later, MWRDRF approved a motion to put Ariel Investments on watch due to “personnel matters.” MWRDRF is also advised by Marquette.

MEABF has $125 million invested with Ariel. For the 10 years ending on June 30, 2025, Ariel has returned 8.1 percent. The Russell 3000 returned 13 percent, and the S&P 500 returned 13.6 percent. The fund’s “US Equity Policy Benchmark,” used for the fund’s entire US equity portfolio, which includes Ariel, returned 10 percent. Ariel did slightly outperform its benchmark selected by the fund, the Russell 2500 Value Index which returned 7.7 percent.

MWRDRF had $80 million invested with Ariel as of March 31, 2025, down from $88 million on September 30, 2024. As of December 31, 2024, the fund’s investments in Ariel had returned 2.4 percent over a three year period. By contrast, the S&P 500 returned 8.9 percent annually over the same time period, and the Russell 3000 returned 8.01 percent. Ariel also trailed the Russell 2500 Value Index (which the MWRD uses as its benchmark) during that time, which returned 3.8 percent.

A review of the Minnesota State Board of Investment’s March 2025 board meeting materials shows that Ariel managed over $400 million in assets for the pension fund, representing 38% of its Global Equity investments. The documents show that as of March, Ariel Investments had underperformed its benchmark in every time frame available, including the last quarter, YTD, one year, three years, and since inception.

Beyond performance issues at Ariel more broadly, the firm may be increasing reputational risk to investors by refusing to stay neutral during the union drive. Sorenson interpreters have joined OPEIU to seek an improved VRS service for the Deaf community through improved working conditions for interpreters and a more stable workforce. Interpreters allege serious problems in the VRS industry, including declining service quality, occupational safety issues, lack of access to benefits, failure to employ deaf employees, and inadequate training. To learn more about health and safety issues at Sorenson, see our recent report, Working through the Pain. Investors should review Ariel’s performance issues and encourage Ariel and Sorenson to take a firm, public stance of neutrality that respects their employees’ decisions to organize and collectively bargain.