Fund firms make shameful progress on diversity

Research shows that little has changed in the profile of the typical portfolio manager over the past 20 years, with low levels of representation for women, gays, non-whites and the working class.

Just 4% of UK fund assets are managed exclusively by women, while 85% of assets are run by men, a shocking new report has revealed.

The report entitled Diversity in Portfolio Management was released on Monday by UK thinktank New Financial. Researchers found that disappointing levels of progress have been made on improving diversity, with the fund industry remaining the preserve of white, public school educated, straight men.

In a media statement accompanying the report’s launch, Yasmine Chinwala, partner at New Financial and co-author of the research, said while the investigation found that asset management firms were starting to take action on diversity, there was much more to do.

She explained: “This is a serious issue. Portfolio management cannot remain an outlier in diversity statistics indefinitely just because it is difficult.

“We found broad consensus across the industry that diverse voices enhance investment performance by increasing diversity of thought, that diversity improves decision-making and investment idea generation while guarding against groupthink and herd mentality.”

The shocking level of gender inequality identified in the sector was one of several unsavoury findings in the report, which also identified 18 barriers that made career progression difficult for portfolio managers.

The top-ranked barrier, according to research, was that the industry believes that “the best will rise the top” although interviews with more than 100 market participants from over 40 firms in the asset management industry proved this was, in fact, not the case.

During the groundwork for the report, researchers encountered only 12 black portfolio managers based in London, while nearly two thirds of industry leaders would found to be public school educated.

Andreas Utermann, chief executive officer and global chief investment officer at Allianz Global Investors, which supported the research, said: “By shining a light on the barriers to greater diversity in portfolio management, and the lack of success in addressing the most significant barriers in an effective manner, this report makes uncomfortable yet vital reading.

“It makes clear our obligation to ensure that current momentum translates into permanent, sustainable change. To that end, as well as underscoring the need for more concerted and effective action, the report offers practical suggestions for where and how asset managers can step up to the challenges we all face.”