Investment committee members generally are satisfied with the diversity of the committees to which they belong, according to a study by Vanguard. Nearly 30 percent defined diversity of their investment committee in terms of members’ backgrounds, and nearly 40 percent said it concerned the experience and expertise of its members.
Nearly two-thirds — 60 percent — said their investment committees are very or extremely diverse regarding members’ professional experience. This may be a sign of success, in a way — Vanguard notes in the report that investment committees have often sought to bolster exactly that kind of diversity.
Committee members ranked a variety of factors related to members’ experience and talents as very or extremely important in affecting the overall effectiveness of the committee’s decisions:
- investment philosophy (72 percent)
- due diligence capabilities (70 percent)
- stability of team members (69 percent)
- asset allocation expertise (55 percent)
- asset class expertise (44 percent)
- tenure in the industry (32 percent)
The study also shows that diversity is not a top concern of the committee members studied. More than 90 percent said that their investment committee had no formal diversity policy; one-quarter said their committee had become more diverse over the last five years, and less than 25 percent said diversity is very or extremely important.
John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.
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