ResearchMarch 9, 2023

Gender-Diverse Asset Managers Get Better Results, Study Says

Equity returns are almost half a percentage point higher with more women in investment firms, per WTW.

Reported by Larry Light

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.”

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.”