Big Investors Demand Alt Investment Firms Hire More Women

The firms appear to be listening, according to KPMG.

Institutional investors in the alternative investments industry are driving efforts to improve gender diversity at the funds and portfolios they invest in, KPMG reported Wednesday.

Seventy-five percent of investors in KPMG’s annual women in alternative investments survey said they planned to ask investment teams to report their diversity efforts over the coming year, compared with 60% in last year’s survey.

Thirty-seven percent said they would require disclosure of diversity statistics for all potential investments, up from 16%, and 42% will require firms in their portfolios to improve diversity, up from 11%.

Improvements in diversity at investment firms will start from a dismally low base, for both women and minorities, recent research showed.

“We are at a critical time for women in business, and even in the highly male-dominated alternative investments industry we’re starting to experience progress,” Kelly Rau, audit partner for KPMG’s financial services practice, said in a statement.

“There is still work to be done, but what’s interesting is that the push toward more balance is coming not only from inside the AI organizations, but now from the investor side — and it’s starting to drive action.”

Alternative investment firms appear to be listening. Here are some of the steps they are taking to improve gender diversity:

The survey found that big majorities of both women and men in the survey agreed that achieving gender diversity was a business imperative.

On the question of whether their sectors and firms were doing enough to advance women, however, they differed sharply. Sixty-five percent of women said their sector was not doing enough, but only 45% of men agreed.

Forty-eight percent of women said their firm was not diligent enough in recruiting, retaining or advancing women; 30% of men agreed.

Half of women in the poll said their firm’s leadership believed diversity was an important part of their business strategy, a statement with which 65% of men agreed.

The survey was conducted in May through July and interview in August through October. Respondents included 866 fund managers and other professionals, investors and service providers.

Retaining and advancing women remains a huge challenge for alternative investment firms, according to the study. “Understanding the reasons why women are leaving is important to driving change and improvement in retention,” Camille Asaro, audit partner for KPMG’s financial services practice, said in the statement.

“The factors that cause women to opt out are complex and are different for many of the women in this field — few examples of women in leadership roles, uncertain upward mobility, questioning their firms’ commitment to gender diversity, inclusion, work/life integration — these are just some of the frustrations women face with their firms.”

KPMG also found an increased focus on women-led funds. It said more consulting firms were looking to increase their roster of diverse and women-owned firms, sponsoring “diverse manager days” and other focused outreach.

“With all of these efforts gaining traction, we are more optimistic than ever before about the potential for increased investment in women-led funds,” Rau said.

Calvert Impact Capital recently examined the connection between gender and financial performance from a private market perspective.

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