About Us Newsroom Morgan Stanley Survey: Pension Funds Are Leading the Way in Diversity-Based Investments, Yet Perceived Financial Trade-Off Creates Hurdles for Many Asset Owners
October 20, 2022
Morgan Stanley Survey: Pension Funds Are Leading the Way in Diversity-Based Investments, Yet Perceived Financial Trade-Off Creates Hurdles for Many Asset Owners
October 20, 2022
New York- October 20, 2021
According to a new report and survey released by Morgan Stanley, while a large majority of pension funds say incorporating gender and racial diversity into investment decisions can be financially beneficial, more than half of asset owners broadly say they believe they must choose between financial gains and a diversity-based approach. This disparity suggests that many asset owners remain sceptical of the financial ROI of diversity, with the exception of public pension funds who are setting the standard for action, according to the survey data.
To better understand how asset owners incorporate diversity into their investment priorities and selection of external managers, Morgan Stanley conducted an inaugural poll of large U.S. asset owners and facilitated supplemental interviews with senior leaders of pension funds.1
“Today we released findings that shed light on a consequential misconception that still exists among asset owners - that incorporating diversity into their investment decisions comes at the expense of returns,” said Carla Harris, Vice Chairman of Morgan Stanley and Managing Director of the Multicultural Client Strategy Group. “This report is part of Morgan Stanley’s strategy to increase equality in the investing landscape and hopefully encourage more asset owners to recognize the benefits of a diversity-based investment approach.”
The findings reveal four key insights among asset owners:
Diversity is a top priority for investment decisions.
Perceived financial trade-off presents a hurdle.
Public pension funds are leading the way.
Need for stronger accountability.
“Continuing to share data-backed evidence of the financial benefits of a diversity-based approach with the broader asset owner industry will help to dispel inaccurate beliefs about investing with a D&I mindset and motivate more progress,” said Seema Hingorani, Managing Director, Morgan Stanley Investment Management. “I hope that this report will help to inspire more asset owners to re-evaluate their standardization practices to formally track external managers’ progress on meeting diversity targets.”
The survey findings are featured in Asset Owners and Investing in Diversity: Intention versus Action, Morgan Stanley’s first asset owner survey and report to better understand their perspectives on the role of diversity in their investment decisions and choice of external managers. The report introduces the Morgan Stanley Playbook for Asset Owners that outlines prescriptive steps that the industry can take to showcase the tangible benefits of a diversity-based investment approach.
The survey was conducted by Brunswick Group between January 12 and April 28, 2021 in the U.S. and interviewed 63 senior investment decision-makers primarily from public pension funds, college or university endowments, insurance companies, and investment consulting firms. To qualify for the survey, respondents must work for organizations that have at least $500 million in assets under management (AUM). Supplemental interviews with senior leaders of pension funds were conducted from June 15 through July 16, 2021 in the U.S.
The full report and survey results can be viewed online here.
About Morgan Stanley
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing investment banking, securities, wealth management and investment management services. With offices in more than 41 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For more information about Morgan Stanley, please visit https://morganstanley.com.
Morgan Stanley Investment Management is the asset management division of Morgan Stanley.
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1 Survey was conducted online and via telephone interviews with senior investment decision makes primarily from public pension funds, college or university endowments, insurance companies and investment consulting firms.