Beyond the Metrics: Demonstrating and Assessing Diversity in Smaller Asset Managers

Culture and diversity are central to most allocator due diligence processes. Key to this assessment is the ability to compare managers across allocator portfolios, both to form a baseline and to monitor for improvements.

Of the challenges faced by smaller asset managers face, the most prominent is the relatively small size of investment teams means one hire or departure can significantly distort metrics. Improving the diversity of these teams needs to be balanced against allocator preferences for stable investment teams. Smaller firms are unlikely to be able to follow published guidance that involves extensive affinity groups or mentoring schemes – and shouldn’t feel obliged to try to put these in place.

Smaller firms also have several important advantages for promoting diversity within the industry. Leaders with a commitment to diversity can have a bigger impact on their employees and even admin-based roles provide opportunities for employees to experience more of the industry, compared to more siloed roles at larger firms.

Diversity initiatives are also broader than the firm, extending to relationships with service providers and support of industry wide initiatives.

This publication follows our Principles of Culture and Diversity Strategies Report which can be used by organisations of any size. This report is intended to bridge the gap between smaller firms’ commitment to diversity and allocator assessments.