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White Paper | Investments Quarterly ideas Exchange

Diversity in the asset management industry

Investments
N/A

October 26, 2020

The importance of diversity and how we measure this in the asset management industry

There is a systemic issue of poor diversity in the investment industry; not just asset management but also other segments. We are committed to help address this, noting this should ultimately help to deliver the best outcomes for savers, in addition to helping to address societal legitimacy issues.

Pleasingly, the analysis supports our beliefs; investment teams with diversity tend to generate better excess returns”

Chris Redmond,
Head of Manager Research

Our manager research process incorporates an explicit assessment of diversity, with a goal of identifying those asset managers with optimal cognitive diversity. While cognitive diversity is hard to measure, it is heavily influenced by other metrics of diversity that we can collect. In recent years we have developed a more data-driven approach to measuring diversity, starting with various measures of gender and ethnic diversity, while supplementing this with the deeper and more nuanced aspects gleaned through our manager research process. We believe we must move beyond just minority and female ownership used by many in the industry, but also to develop metrics and a common language for measuring diversity that allows us to engage the whole asset management industry, including those that are weak in diversity today. Pleasingly, our initial findings suggest a positive link between Willis Towers Watson’s assessment of diversity and performance outcomes, which aligns with our beliefs.

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In this paper we cover:

  • Our beliefs around the importance of diversity as a key ingredient of success for asset managers
  • The importance of looking beyond asset management ownership to understand diversity and what really drives performance
  • Our approach to measuring diversity and asset management culture and how we are engaging with the asset management industry
  • The initial findings of our assessment of diversity and the positive link to performance outcomes
  • The tools we have developed to assess and assist asset managers and asset owners to help bring about change in the area of diversity
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