Private markets managers are adopting diversity polices at a faster pace than public markets counterparts, but are unlikely to be rewarded due to client reluctance to prioritise the issue during selection. Analysis of recent manager searches by investment consultancy bfinance found that diversity was rated a significant or relevant criterion in just 22% of cases, despite 36% of investors telling the firm they would be unlikely to appoint a manager which lacks gender or ethnic diversity in its global asset owner surveys. bfinance said the disparity could stem from some investors needing to hire managers in niche asset classes, meaning they may be primarily concerned with identifying a sufficient number of credible candidates, and less focused on diversity than when selecting managers for a broader strategy. The bfinance report also found that 88% of private markets firms had adopted diversity, equity, and inclusion (DEI) policies compared with 77% of public markets managers. Across all asset managers, diversity in ownership or leadership roles remains very low, with just 4% of firms majority-owned by ethnic minorities, and only 3% by women. In management, only 11% of firms report that more than 30% of their senior team comes from under-represented ethnic backgrounds. bfinance said institutional investors should look beyond headline diversity features and metrics when considering asset managers. “A DEI policy may be a largely symbolic and superficial gesture or can feature clear measurable goals and timelines,” it said. “Mentoring programmes, recruitment practices, employee engagement surveys and strategy-level investment practices can give deeper insights.”
