The performance of diverse teams: Evidence from U.S. Mutual Funds

Research output: Working paper


We examine team diversity and performance in the asset management industry through the lens of identity. Focusing on political ideology as the relevant dimension of identity, we find that diverse teams outperform homogeneous teams. The mechanism involves both improved decision-making due to more diverse perspectives and increased monitoring by heterogeneous team members. The benefits of ideological diversity are undone when political polarization is higher, consistent with increased intra-team conflict. In examining why less diverse teams are prevalent in asset management, we find entrenched managers prefer homogeneous teams, and the local labor market supply of ideologically diverse managers is constrained.
Original languageEnglish
PublisherCentre for Economic Policy Research (CEPR)
Number of pages67
Publication statusPublished - 28 Feb 2022

Publication series

NameSSRN Electronic Journal


  • Mutual fund
  • Teams
  • Dispersion in beliefs
  • Identity
  • Diversity
  • Labor incentives
  • Political ideology
  • Campaign contributions
  • Polarization
  • PACs


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