16 Nov 2022

Increasing Diversity in Allocator Portfolios

Many allocators are now looking to increase the diversity of their portfolios. This report explains practical steps that allocators can take to enhance their manager sourcing and selection processes and improve the levels of diversity in their external investments.

There is a wealth of research that shows that there are benefits to diverse teams. An allocator’s portfolio is essentially a team of investment managers responsible for investing a pool of capital. It follows then that, in the same way good practices promote diversification of strategies, asset classes and jurisdictions, diversity of investment managers should be beneficial.

This report explores practical steps that allocators can take to improve the diversity of their portfolio.

It starts with the foundations of understanding your risk tolerance and the current level of diversity in your portfolio. It then moves on to ways to expand the networks of the investment team, structural changes that could be made to the manager selection process and a consideration of whether diverse manager programmes are the best way to promote diversity.