Fund management teams across all asset classes from private investment through venture capital and private equity to public equities have immense power to drive returns and impact through the decisions they make. Evidence shows that diverse—both gender-diverse and racially-diverse—outperform homogenous teams due to diversity of thought and avoiding groupthink. Yet, most fund management teams are homogenous. 

Only 14% of fund managers are women, and 22% of the investment industry workforce are people of color, despite this group comprising more than 40% of the U.S. population. Specifically, the underrepresentation of African Americans and Hispanic/Latinx is acute. African Americans represent just 5% of the investment industry workforce, despite comprising 12.4% of the US population. Similarly, Hispanic/Latinx Americans represent only 8% of investment professionals despite comprising 18.7% of the US population. 

A 2021 Vanguard study of 2,600 US active equity funds found mixed-gender teams outperform the benchmark by 47 basis points per year, and a 2023 WTW analysis found investment teams in the top quartile of gender diversity outperform those in the bottom quartile by 45 basis points per year. Research in Harvard Business Review, similarly shows that diversity of thought leads to better decision making and outcomes. By excluding women and people of color from financial decision-making tables, investors are leaving money and talent on the table.

"diversity of thought leads to better decision making and outcomes"