Influential investment consultant WTW strengthened the backing for diversity in portfolio management after producing research that showed greater diversity leads to better investment results.
Most gender-diversified investment teams outperformed teams that were the least diversified by 45 basis points (bps) per annum, the firm’s research revealed.
By asset class, WTW – which advises institutional investors with collectively US$4.7 trillion of assets under management - showed equity and credit displaying a “gender diversity premium” of 46 bps and 14 bps, respectively, on an annual basis. The firm studied 1,500 investment strategies.
Chris Redmond, head of manager research at WTW, said: “There has undoubtedly been progress made on diversity by many asset managers in recent years, but the fact is that pace of change at an industry level is still slow and disappointing.”
However, “extraordinary” investment performance linked to “superior diversity” can accelerate more diversity in the investment industry, Redmond said.
The research found no substantial relation between the size of a firm and the level of diversity. This indicates that larger firms may not always be more diverse.
Additionally, data collected by WTW this year showed that 42% of asset managers out of 400 had measurable objectives for diversity, equity and inclusion (DEI) policies, while nearly half had no endeavours to attract more senior diverse talent
“The long-term success of DEI requires asset managers, investment consultants and asset owners to collectively commit to change,” said Paula Robinson, US equity manager research director at WTW.
The firm published its findings in a paper called ‘Diversity in the asset management industry: on the right track but at the wrong pace’.
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