Gender-Diverse Asset Managers Get Better Results, Study Says

The more gender diversity, the better investment teams perform. That’s the conclusion of a WTW research paper that found larger inclusion of female staffers boosted equity by 46 basis points and fixed income by 14 bps.

The study, which surveyed more than 400 asset management firms, indicated that the managers still have a way to go. Just 42% of them have any measurable objectives in their current diversity, equity and inclusion policy. Further, almost half, 49%, “have no targeted initiatives to attract more senior diverse talent,” the report stated.

While many believe that the larger companies are more adept at DEI initiatives, WTW’s research found “no meaningful relationship between organizational size and greater diversity across ownership or senior leadership.” Corporate size, it concluded, “does not always translate into increased overall diversity.”

Data on DEI is too slender at too many companies, the consultancy said. The study urged all employers “to expand data collection across other inherent and acquired traits of diversity, such as disability, sexual orientation, socioeconomic status and neurodiversity.”

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Since 2020, when WTW began publishing this survey, DEI improvement has occurred, yet not fast enough, the report declared. “There has undoubtedly been progress made on diversity by many asset managers in recent years, but the fact is that the pace of change at an industry level is still slow and disappointing,” remarked Chris Redmond, head of manager research at WTW, in a statement.

WTW has a program it developed to help employers boost their DEI. “Alongside seeking diverse teams, we need to engage with the whole industry, pushing some of the largest and longest standing asset managers to improve their DEI,” the report noted. Mentorship, training and sponsorship to underrepresented groups are vital to achieve these ends, it said. Measuring gender and ethnicity pay gaps are part of that, in WTW’s eyes.

Perhaps once asset managers realize that better diversity brings better returns, more will turn to DEI, the study contended. Said Redmond, “We are hopeful that the truly extraordinary investment performance benefits linked to superior diversity can serve as a catalyst for acceleration.”

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Tags: Asset Managers, data collection, DE&I, Diversity, Investment, mentorship, training, WTW

Total market volume for the U.K. pension risk transfer market declined to £26 billion in 2022 from £30 billion in 2021, according to data from Legal & General. Despite the decline, it was the fourth straight year the market surpassed £25 billion and is estimated to be the fourth largest year on record.

Approximately £12 billion of the 2022 volume came during the first half of the year, with approximately £14 billion in the second half. There were with five deals during the year worth more than £1 billion: the British Steel Pension Scheme’s second and third buy-ins with Legal & General, which totaled more than £4 billion; the Co-operative Bank Pension Scheme’s £1.2 billion full buy-in with Rothesay; Electronic Data Systems 1994 Pension Scheme’s £1.1 billion full buy-in with PIC; and the WHSmith Pension Trust’s £1 billion buy-in with Standard Life.

According to Legal & General, that improved pension funding levels have greatly accelerated the number of pensions looking for a buyout, and some market participants have projected demand for buy-ins and buyouts could reach £200 billion over the next few years.

“Increasing numbers of UK pension schemes are looking to insurance to provide security to their members,” John Towner, head of U.K. pension risk transfer at Legal & General Retirement Institutional, said in a release. “Our market has continued to deliver for pension schemes in all varieties of environments. We are excited for what we expect will be a busy few years ahead.”

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However, the firm said the robust market volume belies the sharp drop in liability values and that deals that closed toward the end of 2022 would have been significantly larger by transaction value had they been completed earlier in the year. According to Legal & General, 2022 could therefore be considered the second busiest year on record. It also said that the BSPS deal represents one of the largest de-risking arrangements the firm has ever implemented with a single partner in a calendar year.

Looking ahead to 2023, Legal & General expects accelerating demand for pension risk transfer deals, saying there has been a “notable increase” in the number of pension plans approaching the insurance market and that the pipeline this year “is the busiest we have seen.” It adds that, “for insurers and industry counterparties this will mean stepping up to the challenge to increase capacity.”

The firm also said it expects more full pension buyouts this year, as an increasing number of plans can afford to fully insure their liabilities. It said a good indicator of this was that 18% of plans were estimated to be fully funded as of the end of September 2022, up from 5% the previous year.

Gender-Diverse Asset Managers Get Better Results, Study Says

UK Pension Risk Transfer Market Drops to £26 Billion in 2022

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