Ethnic diversity is increasingly becoming an important part of UK fund managers winning business, a think tank claims.
Research by Reboot, a working group of senior financial services professionals, reveals that more than one in five (21%) fund managers now place a business focus on building a more ethnic diverse team.
Furthermore, most (53.3%) of Reboot’s institutional investor panel considered the ethnic breakdown of a company when selecting a fund manager as ‘quite important’ while around 60% are committed to encouraging fund managers to build a more diverse team.
And 40% of UK-based fund managers believe the industry is doing an ‘excellent’ job in attracting minority talent – the highest in Reboot’s global study.
And although nearly half (47.3%) of institutional investors wouldn’t decline working with a fund manager due to a lack of diversity, 38.3% would – which indicates something of a change in the investment industry.
Another change highlighted by the research is that two-thirds (67.7%) believe the focus fund managers place on diversity when awarding mandates will be much more important in the next five years.
Justin Oneukwusi, head of investment at St James’s Place and co-founder of #TalkAboutBlack, believes that the industry needs to do more. “The conversation and subsequently resources are overly focused on recruitment rather than creating the right cultures to retain and progress talent regardless of background.”
Helen Price, co-chair of the Asset Owner Diversity Charter and director of governance at the Church of England Pensions Board, added that the charter brings asset owners and consultants together to agree a consistent set of diversity metrics for fund managers.
“Driving standardisation reduces the burden multiple frameworks place on companies whilst providing the necessary transparency for fund allocators to understand the diversity of the investment teams they appoint.”
She continued to say that there is a good middle ground here and the charter helps “nudge the industry towards making high-quality disclosures to ensure we move towards greater diverse representation”.
Reboot’s founder, Noreen Biddle Shah, highlighted that there is no political or regulatory mandate to report on ethnicity pay gaps and many companies will not report such information unless it is compulsory.
“In 2020, the number of UK companies voluntarily disclosing their ethnicity pay gap was around 10%,” she added. “That figure was significantly lower for financial services at just 4%.
“As an industry, we have quite a way to go.”
However, she added: “The direction of travel is going towards mandatory reporting, alongside growing pressure from investors over the coming years. This can only be seen as a positive step forward.”
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