Diversity Matters: The Role of Gender Diversity on US Active Equity Fund Performance

20 Pages Posted: 27 Apr 2022

Date Written: March 23, 2022


The quality and diversity of a fund’s investment team has long been viewed as a critical part of its success and a potential driver of performance. Yet because active fund management still lacks gender diversity, there are likely additional benefits to be realized.

This study leverages a novel dataset of information about the composition of investment teams for over 2,600 US active equity funds from 2008 to 2021 to test whether gender plays a critical role in the performance of investment teams and the subsequent returns those teams generate.

By controlling for fund characteristics along with other dimensions of diversity, we find that maximizing gender diversity correlates with as much as a 38.9 basis point improvement in fund performance. This relationship is strengthened by controlling for education quality and non-gender related diversity – suggesting that even among well qualified and otherwise diversely educated teams, gender diversity is important for active equity management.

Keywords: diversity, gender diversity, fund performance, fund characteristics, natural language processing, active management, equity management, manager selection

JEL Classification: G20, J16, M14

Suggested Citation

Lawrence, Stephen, Diversity Matters: The Role of Gender Diversity on US Active Equity Fund Performance (March 23, 2022). Available at SSRN: https://ssrn.com/abstract=4081494 or http://dx.doi.org/10.2139/ssrn.4081494

Stephen Lawrence (Contact Author)

The Vanguard Group ( email )

100 Vanguard Blvd
Malvern, PA 19355
United States

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