Pockets of the asset management industry are showing signs of deliberate and powerful change when it comes to actively diversifying investment teams and reorienting conventional thinking.

Creative, well-researched and imaginative ideas, translated into business economics, generally form the basis of good investment returns. It stands to reason the investment teams that come up with those ideas are the ones that outperform their peers. But in order to generate wide-ranging, dexterous and outside-the-box thinking, those teams need to be diverse.

When it comes to actively diversifying investment teams and reorienting conventional thinking, pockets of the asset management industry are showing signs of deliberate and powerful change.

Capital Group is one of the largest investment management organisations in the world, with US$1.8 trillion ($2.5 trillion) in assets under management.

The group’s investment process has been honed and redefined many times over the organisation’s 87-year history but there remains a fastidious focus on making sure those debating and interrogating the investment ideas practise cognitive diversity.

“There is no style, thinking process or investment result that is the same in any of our funds,” says Paul Hennessy, managing director of Capital Group Australia, where 18 per cent of the portfolio managers are women. “Diversity is the very foundation of how the investment process works.”

There’s a similar message behind the Future Impact campaign, headed by Mercer’s Yolanda Beattie and funded by a prestigious collection of Australian superannuation and fund managers.

In a world of low economic growth, where investment firms need to work hard for returns, there is a movement of teams eager to form and support the next wave of asset managers – particularly women and those from a variety of different cultures – because they believe that’s where the new ideas lie.

Future Impact has a mandate to shift the perception of the hyper-masculine, blokey money management industry and instead present a powerful, layered sector that has real capacity to put its money where its mouth is and effect global change.

For a young, female university student or newly arrived migrant, that could be an incredibly compelling proposition. But as asset managers around the country are realising, attracting and retaining diverse talent, particularly women, is much more difficult than just advertising more widely and hoping they disrupt ingrained cultures themselves.

THE CRITICAL MASS FACTOR

As it stands, the industry is filled with teams of largely white, extroverted men, making it difficult to find new and different points of view. That’s not to say the existing industry lacks capability or insight; rather, the ways of approaching problems stem from a narrow set of lived experiences.

Each year, Mercer conducts a study with asset managers and owners, using surveys, focus groups and interviews to discover the levels of diversity within the industry. The concept of diversity is often difficult to measure, but Mercer looks across gender, cultural background, age, socioeconomic background and educational qualifications.

This year’s study found that 76 per cent of investment managers are male, 48 per cent are private-school educated (compared with the national average of 35 per cent) and 76 per cent of those who completed postgraduate studies have a master’s degree in finance.