Only 4% of asset management companies are majority-owned by ethnic minorities, and only 3% are majority-owned by women, according to bfinance’s Seeking Diversity from Investment Managers report.
While DEI principles have had growing acceptance in the investment industry, the uptake of principles has experienced lag. Although 36% of institutional investors claim they are unlikely to hire someone without gender or ethnic diversity, just 22% of firms treat diversity as a “significant factor” in selecting a manager. There is little impetus for change in this area from the investment client perspective, with 78% of investment client respondents calling diversity “irrelevant” as a factor for selection.
See also: Rainbow ceiling represents a ‘hidden gem’ of an investment opportunity
While firms may have the desire to create a more diverse manager environment, bfinance recognised that this can be challenging in a niche strategy area, where the pool of candidates can be limited.
Martha Brindle, senior director of equity and Fiyin Kosoko, senior associate of ESG and responsible investment, said: “Broad tenders that maximise the universe of asset managers under consideration for any given mandate can be helpful for investors that wish to see diversity principles embedded in their partner appointments, by widening their choices so that these starting principles can flow through to end implementation.”
Ownership of firms also continued to show a major imbalance of those with gender and ethnic diversity. This was slightly better in the US market, where 6.1% of asset managers were majority-owned by ethnic minorities and another 6.1% were majority-owned by women, according to a 2021 report by the Knight Foundation. In general, Europe focused their diversity efforts on company leadership and senior investment staff rather than ownership.
See also: Diversity Project Europe: Just 20% of asset managers track social mobility
“It’s important to remember that investors’ definitions, preferences and beliefs surrounding diversity differ greatly,” Brindle and Kosoko said.
“We noted regional differences, such US investors’ greater focus on diversity of ownership. Asset owners bring specific views and may show a preference for managers that align with their particular philosophy on diversity. And, even where the investor has quite clearly defined views on this subject, they may decide not to emphasise them across every part of their portfolio. In short, there is no ‘one size fits all’ approach.”
75% of asset managers have some sort of DEI policy in place, though bfinance noted that “having a policy does in place does not necessarily mean that the policy has substance or involves meaningful commitments”.
