WTW research shows diverse investment teams outperform
WTW's new analysis reveals that investment teams with higher gender diversity achieve better outcomes, outperforming less diverse teams by 45 basis points annually. The report draws from over 1,500 investment strategies, noting that equity and credit strategies report a diversity premium of 46 and 14 basis points, respectively. Despite some progress, only 42% of asset managers have measurable DEI objectives, and nearly half lack initiatives to attract diverse senior talent. WTW plans to enhance diversity monitoring through the WTW Diversity Index, emphasizing the need for broader diversity data collection beyond gender and ethnicity.
- Investment teams in the top quartile of gender diversity outperform the bottom quartile by 45 basis points annually.
- Equity and credit strategies show a gender diversity premium of 46 and 14 basis points per annum.
- Only 42% of asset managers have measurable DEI objectives.
- 49% of asset managers lack initiatives to attract senior diverse talent.
- No significant relationship between organizational size and diversity in leadership positions.
ARLINGTON, Va., March 07, 2023 (GLOBE NEWSWIRE) -- New analysis released by WTW has revealed that an investment team with a greater level of diversity leads to better investment outcomes. In the company’s new paper, “Diversity in the asset management industry: On the right track but at the wrong pace,” data show that investment teams in the top quartile of gender diversity outperform the bottom quartile by 45 basis points yearly in terms of net excess returns.
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 46 basis points and 14 basis points yearly per annum, respectively.
In future years, WTW will provide additional insights into diversity data through the WTW Diversity Index, which will allow an investment strategy to measure and compare its diversity with that of peers today as well as its optimal diversity level. This will enable WTW to monitor the diversity premium at an even more granular level over time.
Additional data collated this year from over 400 asset management firms on diversity, equity and inclusion (DEI) show that only
While to date the industry has largely focused on gender and ethnicity — 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 status and neurodiversity.
The results of WTW’s research furthermore found no meaningful relationship between organizational 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.
“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,” said Chris Redmond, head of Manager Research, WTW. “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 analyze 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 targets can be reached.”
“We have integrated DEI across our research and portfolio management processes, compelling us to engage with asset managers to improve and share best practice,” said Paula Robinson, director, U.S. Equity Manager Research, WTW. “We have also built out a comprehensive DEI reporting toolkit for asset owners to set out, and set off, on their own DEI journey. The long-term success of DEI requires asset managers, investment consultants and asset owners to collectively commit to change.”
The full paper can be accessed here.
About WTW Investments
WTW’s Investments business is focused on creating financial value for institutional investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. It has over 900 colleagues worldwide, more than 1,000 investment clients globally, assets under advisory of over
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.
Learn more at wtwco.com.
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