Diverse investment teams outperform, WTW research shows

Written by Adam Cadle

07/03/2023

Investment teams in the top quartile of gender diversity outperform the bottom quartile by 45bps per annum in terms of net excess returns, new analysis released by WTW has revealed.

The detailed diversity data, collated from over 1,500 investment strategies, has also been broken down by asset class. The findings show equity and credit displaying a gender diversity premium of 46bps and 14bps per annum respectively.

Additional data collated this year from over 400 asset management firms on DEI (Diversity, Equity & Inclusion) shows that only 42% of asset managers responding currently have any measurable objectives in their DEI policy, while nearly half (49%) have o targeted initiatives to attract more senior diverse talent.

While the industry has largely focused on gender and ethnicity to date, two of the largest underrepresented groups in absolute terms, WTW is also encouraging all firms to expand data collection across other inherent and acquired traits of diversity such as disability, sexual orientation, socioeconomic diversity and neurodiversity.

The results of WTW’s research furthermore found no meaningful relationship between organisational size and greater diversity across ownership or senior leadership, indicating that while there may be a perception that larger firms are able to appoint specialist resources and implement more DEI policies and initiatives, this does not always translate into increased overall diversity.

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 the pace of change at an industry level is still slow and disappointing. We are hopeful that the truly extraordinary investment performance benefits linked to superior diversity can serve as a catalyst for acceleration. That is why we believe it is crucial to analyse the data on an ongoing basis to track where we are as an industry and to stimulate conversations. However, it is also important that we look beyond pure numbers to form a robust qualitative view on DEI and culture to really understand how each asset manager is progressing and how quickly it will take to reach their targets.”

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