DIVERSITY, EQUITY & INCLUSION
A long road still to travel
Yes
No
Not sure
Investment teamsAcross the survey, the average investment team is still made up of 23% women and 77% men*, but the rate at which women are joining investment teams is higher than that of men. There are still 6% of firms with no women within their investment team.
* across the survey, genders other than male or female totalled less than 1%.
Socioeconomic diversitySocioeconomic diversity has become an important topic for our industry, forming one of the three key themes for The Diversity Project for 2023.
Year-on-year we have seen positive progress across three metrics in our survey, though the numbers still have a way to travel:
29% of firms now track metrics relating to socioeconomic diversity (vs. 21% in 2022).
The proportion of firms with socioeconomic diversity targets at the firm level has risen to 13%, from 11% last year.
A greater number of asset managers (37%) now believe that their process provides them with a good understanding of socioeconomic diversity in their team (vs. 35% in 2022).
Measurement and disclosureWhile we understand that regulations make disclosures more challenging, the lack of internal and external disclosure on DEI metrics is concerning.
In our survey, only 50% of managers measure their gender pay gap and only 24% of managers measure their ethnicity pay gap. Meanwhile, 6% of firms chose not to disclose their aggregated investment team gender split.
When asking for information on investment teams for a specific strategy, only 58% disclosed the gender split and only 31% disclosed their ethnicity split.
Leading with the positives, 94% of surveyed asset management firms have a DEI strategy or policy. The managers with a policy have almost double the level of female representation in investment teams than those without (23% vs. 13%).
Most managers suggest they are not just committed to DEI for its own sake, but also believe that more diverse teams help them maximise success. Almost all (96%) believe that diverse teams create a culture of success and improve their ability to deliver a more effective investment strategy, while the remainder neither agree nor disagree. Digging deeper into current policies and financial commitments, however, we see a less persuasive story.
94% of surveyed asset management firms have a DEI strategy or policy. Shockingly, fewer than 50% of managers have targets relating to any DEI factor."
Shockingly, fewer than 50% of managers have targets relating to any DEI factor. Gender is the most common factor among managers with targets (49%), followed by race (32%) and inclusion (32%). The incentives for meeting DEI KPIs where they exist is also questionable, with only 37% of managers linking senior remuneration to these metrics. This proportion has fallen slightly from the 41% recorded in 2022.
When it comes to responsibility for implementing a DEI strategy, a growing number of asset managers employ a dedicated headcount to lead on DEI, with 6% of the firms we surveyed having a Head of DEI or equivalent responsible for implementing DEI policies and initiatives. Leadership, C-Suite and the Board are responsible at 44% of surveyed firms, while a surprisingly small number (9%) have Human Resources responsible for implementation. Although a DEI committee approach has been shown to be effective, it is important to ensure that the members of those committees are compensated fairly – and that DEI commitments are incorporated into individuals’ key role requirements.
There has been a clear year-on-year shift to senior accountability, demonstrated by an increase in the proportion of managers who view the leadership, c-suite or board as accountable for DEI policy:
In 2022, 82% of firms held the Leadership accountable for DEI; this year, 91% of firms do.
In 2022, 65% of firms held the C-Suite accountable for DEI; this year, 75% of firms do.
In 2022, 68% of firms held the Board accountable for DEI; this year, 75% of firms do.
The proportion of firms that believe junior employees are accountable has remained broadly in line over the year.
The proportion of managers with shared parental leave, regular engagement surveys and flexible working policies sits at 61%, 75% and 91% respectively, slightly higher than the numbers recorded in our 2022 survey.
Interestingly, those with flexible or smart working policies have, on average, almost double the proportion of females in their total aggregated investment team.
Firms with flexible or smart working policies have, on average, almost double the proportion of females in their total aggregated investment team."
Looking at recruitment policies, 82% of managers work with a dedicated DEI organisation, including organisations such as 10,000 Black Interns (43%) and Investment 2020 (25%), to help increase the diversity of their applicant pool. Most organisations we engaged with in the survey target junior or entry-level positions. Conversely, the message is entirely different when looking at whether managers employ specific quotas, with only 27% of managers employing quotas at any stage of their recruitment process. Only 17% of managers set quotas for applicants and only 16% set quotas for interview panels.
Parental leave is a topic that comes up regularly in DEI discussions. Earlier this year, Redington hosted a roundtable with senior leaders in the industry to discuss how to address the underrepresentation of women in senior positions. Within the discussion, the significant difference between maternity and paternity leave policies was raised. The average (median) weeks of full pay offered in a maternity leave policy from respondents in our survey is 18 weeks; the average for paternity leave is four weeks. Furthermore, 21% of managers have more than 20 weeks difference in what they offer at full pay for maternity versus paternity leave. Will increasing paternity leave to be more aligned with maternity help support representation of women in senior roles?
Over 50% of surveyed managers believe that their current team represents the diversity demographics of the country and region they operate within. However, when looking at gender representation, for example, 50% of the managers that strongly agree their team represents societal diversity have fewer than 30% women in their investment teams, demonstrating that there is a lot of work still to do.
As highlighted at the beginning of this section, only 31% of the strategies we surveyed disclose ethnicity splits within their investment team. Those that did on average had: 63% as White/Caucasian, 22% as Asian or Asian British, 2% as Black/African/ Caribbean/Black British, 2% as Mix/Multiple ethnic groups, 3% as other ethnic groups and 8% as non-disclosed.
To collect this data, we have used categories as per the 2021 UK Census; however, it is important to note that the ethnicity groups listed are incredibly broad. To understand ethnicity splits more effectively, there needs to be more granular data available.
At this time, the level of disclosure from underlying managers is limited.
35% of strategies have 100% of those listed as portfolio managers listed as male. Only 4% of strategies have males being less than half of their portfolio managers. 0.5% of strategies have individuals within the investment team who identify as a gender other than male or female.
35% of strategies have 100% of those listed as portfolio managers listed as male. Only 4% of strategies have males being less than half of their portfolio managers."
Multi-asset strategies were the most dominated by male portfolio managers, with 52% of strategies having all-male portfolio management teams.
When making investment decisions, 61% of strategies across all asset classes consider DEI within their investment process, with public equity coming out on top at 74%. Real Assets (Property and Infrastructure) performed most poorly, with less than half of strategies considering DEI.
Gender is on average the most assessed DEI metric in investment decisions, with 52% of strategies assessing this. In each individual asset class, gender is the most assessed metric followed by race, except for Equities, which assessed professional factors above race. Public Equity again comes out on top, with the highest percentage across five of the eight factors.
When making investment decisions, 61% of strategies across all asset classes consider DEI within their investment process, with public equity coming out on top at 74%."
Among the strategies that integrate DEI metrics, the key drivers identified for assessing these factors within the investment process were mixed: 42% of strategies are driven by investment returns, 25% by investment risk, 20% by social responsibility, and only 6% by social impact. 9% of strategies were driven by a combination of the aforementioned factors.
Despite higher-than-expected levels of assessment and integration of DEI in the investment process, reporting falls short, with only 15% of strategies undertaking any type of DEI reporting for their funds. Only a further 7% of strategies have KPIs in development. Although not necessarily reported, it is promising that 36% of strategies track gender diversity at board level within their portfolio companies. 14% track racial and/or ethnic diversity at board level.
Despite higher-than-expected levels of assessment and integration of DEI in the investment process, reporting falls short, with only 15% of strategies undertaking any type of DEI reporting for their funds."
