Fund managers ignore diversity in investment decisions

Fewer than half of asset managers evaluate gender diversity when researching potential investments, despite the fund industry’s increasingly outspoken stance about the need for more women in top corporate jobs.

Asset managers across the world have taken companies to task over a lack of women on boards and in senior roles in recent years, using their votes at annual meetings to punish businesses that are not appointing more women.

But a study from pension consultancy Redington, which polled 100 asset managers with $10tn in assets under management, found that just 47 per cent of the 192 investment teams analysed considered gender diversity as part of their investment analysis.

Nick Samuels, head of manager research at Redington, said the survey showed there was a disconnect between what stewardship teams at asset managers said to companies about the importance of gender diversity compared with how investment teams approached the issue.

“There is an accepted wisdom that decisions are better when made in a cogitatively diverse way,” he said. “You would think portfolio managers would be interested in how diverse these companies are and how that might influence [their] discussions.”

He said the research found that US investment teams were more likely to look at gender diversity compared with rivals around the world.

The Redington research also found that three-quarters of asset managers tracked the diversity of their own teams, while almost six in 10 felt that gender diversity was “an important contributor to their own success”.

Despite this, the survey found that investment teams were heavily dominated by men, with two-thirds reporting they had less than 25 per cent female representation.

Mr Samuels said this low level of women across investment teams, which often includes analysts and product specialist roles as well as portfolio managers, suggested the fund industry would face an issue getting more women into investment jobs in the coming years. “It is a pipeline issue,” he said.

He added that Redington was speaking to asset managers about how they could factor diversity into their investment decisions, while also increasing the number of women in their teams.

Axa Investment Managers, Columbia Threadneedle and RBC Global Asset Management are among the companies that have increasingly taken a tough stance against companies with a lack of women in top jobs.

Sacha Sadan, director of investment stewardship at Legal and General Investment Management, said portfolio managers should look at diversity when making investment decisions. He said the active management teams at LGIM did look at the number of women on boards and at managerial level when making investment decisions.

“Diverse boards perform better. That’s what the studies show,” he added.

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