After reaching a “milestone” number of women directors in 2023 the investment industry now needs to turn its attention to other kinds of diversity, the Association of Investment Companies has stated.
Annabel Brodie-Smith, communications director at the trade body, said in 2023 40 per cent of investment trust directorships were held by women.
However, she noted there was still work to be done when it comes to other types of diversity of fund managers to avoid detrimental phenomena such as "groupthink" - the failure to evaluate alternatives before reaching a consensus.
She said: “The industry has made swift progress on gender diversity, appointing many excellent women to investment trust boards.
“But there is still a lot of work to do – not least on other kinds of diversity. Investment trusts are already reporting information on the ethnic diversity of their boards, and in 2024 we should be able to get a better picture.”
Brodie-Smith said the AIC will be working to help members increase diversity in 2024, in part through its ‘pathway’ website which aims to bring people from “all walks of life” into the sector.
She added: “Boards that are diverse in multiple ways provide the best defence against groupthink and are more likely to have the right combination of skills, experience and knowledge to uphold shareholders’ interests.
“When it comes to fund managers there is a lot of room for improvement as currently only 13 per cent of investment trust fund managers are women.
“Boards should ensure that diversity is considered when they are reviewing succession policies or appointing a new manager.”
In November, the FCA warned firms lacking diversity were at a “much greater risk” of not having a healthy culture.
It came after the regulator launched a consultation with the Prudential Regulation Authority which includes measures to improve diversity in financial services.
The consultation closed on December 18 with final rules expected to be published in 2024.
tara.o'connor@ft.com
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