Long time readers of Abnormal Returns are likely already aware of our interest in the question of diversity in asset management. Just last week we highlighted academic research that shows a disparity in portfolio manager jobs between those from high and low income backgrounds.
Most of the focus on diversity in asset management is on that of gender. Women are significantly under-represented in the asset management business. One of the big questions is why?
M.P. Dunleavy in the NYTimes notes the huge gender “chasm” in the money management business:
This isn’t a gender gap; it’s a chasm. And it would be startling in any field in 2017, but in finance it’s almost mystifying. A substantial body of research has shown that having more women in leadership roles — whether in corporations or asset management — seems to improve performance.
Part of that seems to be a function of awareness. Women in MBA programs simply aren’t as aware of opportunities in money management than they are in other industries. To help offset this companies like the Capital Group are going to great lengths to try and build a pipeline of female applicants.
As we have written previously this ongoing gender disparity seems like a “market failure.” M.P. Dunleavy comes to much the same conclusion:
Ultimately, the bottom line is truly about the bottom line — for financial companies and investors. All-female and mixed-gender teams combined now oversee nearly $3 trillion of mutual fund assets in America, Morningstar says. Considering that greater gender diversity seems to improve performance, it appears that closing the gender gap isn’t just good for women. It’s a potentially terrific investment for everyone.
The gender gap in asset management won’t be closed overnight. But outreach efforts on behalf of some of the nation’s biggest money managers is a good start.