A growing body of studies across a variety of sectors and approaches has found that companies with greater diversity are more likely to outperform those with less diverse leadership and teams. McKinsey & Company found that companies in the top quartile for gender diversity were 25% more likely to outperform industry-median growth in earnings before interest and taxes than bottom-quartile companies. Similarly, executive teams in the top quartile of ethnic diversity were 36% more likely to financially outperform the industry median.1
Despite the benefits of diverse teams, the magnitude of under-representation of diverse perspectives in investing is staggering. Fortunately, this imbalance is starting to change, as institutional investors are increasingly recognizing the potential opportunity that diverse entrepreneurs and investors offer in creating financial return and diversification. Many are asking how they can capture that value in their portfolios, whether by deploying capital with diverse portfolio managers across asset classes, or by investing directly into companies founded by diverse teams.
