Diversity Hub – Feature
A diverse asset management team is not typically a top priority when asset owners are selecting the firm they will entrust to invest their capital. While the importance of the investment world’s diversity narrative is growing, much work remains to be done.
A lack of role models has been a stumbling block. “There is a stark under representation in the asset management industry,” says Justin Onuekwusi, a fund manager at Legal & General Investment Management (LGIM), who also founded EnCircle Mentoring, which mentors diverse asset managers. Under representation is an issue also highlighted by Jasmine Richards, managing director and head of diverse manager research at Cambridge Associates. “I don’t think you can find another opportunity as large and under-funded as women and people of colour,” she says. “Globally, less than 2% of assets are invested with diverse fund managers and if you look at the number of investment products available, they represent approximately 10% of the universe.” So diverse fund managers are not only under-represented, but also under-invested in. “Given the amount of research that has shown no trade-off in performance versus their white male counterparts, we see this as a tremendous investment opportu- nity for our portfolios,” Richards says.
Being authentic In order to address the lack of investment in diverse talent, def- initions will play a role. “What we’ve found is that the defini- tion of a diverse organisation is unique to individual organisa- tions and should be based on their individual goals,” Richards says. “However, when considering an investment, ultimately we are looking for authenticity.” Cambridge Associates has surveyed its fund managers on the diversity of their ownership, management, investment deci- sion-makers and teams since 2019. “Given the prevalence of data on the benefits of diversity in decision-making, transpar- ency on demographics is table stakes [the minimum offering],” Richards says.
“When making investment decisions we are using that data as a jumping off point for a deeper discussion,” Richards adds. “We are investing in fund managers who not only consider the diversity of their investment teams but also diversity among their operating partners, developers, banking partners and the impact to the communities in their portfolios. All of that matters.”
In other words, not just asset managers, but also the wider investment chain should be considered when measuring diversity. In this way, the process of involving more diverse managers is changing and evolving, albeit slowly, Onuekwusi says. “More and more manager researchers are beginning to understand
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