Cognitive Diversity in Asset Management

New study by Professor Alex Edmans finds cognitive diversity can give investment teams a significant edge – but only if managed well.

In 2024, the Diversity Project invited academics from around the world to submit research proposals to explore any linkage between cognitive diversity and the performance of investment teams. We stressed that we wanted to know what the evidence showed, not work backwards from any conclusion we might hope to see. We commissioned Professor Alex Edmans for this important research.

The original common-sense goals behind diversity initiatives – to improve decision-making, mitigate the risk of groupthink, hire and develop the best people and give all talent a fair shot – have been lost amidst a politicised battle. Rather than discuss differences thoughtfully or objectively, debaters are divided along ideological lines. Professor Edmans’ new research reclaims this debate by considering the evidence.

For the purpose of this research, Cognitive Diversity has been defined as the range of expertise, experience, perspectives, preferences, traits and ways of thinking within a team. It can arise from differences in educational background, professional background, life background, cognitive style or personality and demographics.