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AB: Diversity of Thought a New Approach to Equity Alpha

AB: Diversity of Thought a New Approach to Equity Alpha

Published 11-22-23

Submitted by AllianceBernstein

Gayle Baldwin| Senior Research Analyst and Portfolio Manager—Equities

Vivian Lubrano| Portfolio Manager—Equities


Vivian Lubrano: The world is becoming an increasingly diverse place, especially the societies that we live in and we invest in. It’s not just about social equity that companies need to focus on diversity, equity, and inclusion; it’s really about business fundamentals. They have to worry about how they can, in their future, incorporate and work with more diverse employees and more diverse clients.

Gayle Baldwin: So the companies that are thoughtful about assembling teams with different cognitive diversity, different ways of thinking, have the potential to really outperform. And I don’t think investors necessarily understand or are identifying that as a source of alpha.

Vivian Lubrano: And what’s very exciting is when we find companies that are finding that relevant diversity for them. There’s this technology company, Infosys, and they have to hire a lot of engineers coming out of college. So for them, historically, hiring men, finding engineers and engineering colleges, but they had to look inwards and they realized, “No, what I need is problem solvers. I can teach the engineering skills. I cannot teach critical thinking.” And that led them down the whole path of rejiggering their whole recruitment process, working with liberal arts and community colleges to hire liberal arts students that are good problem solvers and teaching them the engineering skills they need. So as a result, they actually drove growth, they’ve been able to deliver on their clients’ promises, and they’re also getting a more diverse employee base because community colleges are mostly women and minorities, and that’s really helping them with community engagement at the ground level. It’s been a big success.

Gayle Baldwin: The research organization IQVIA is another interesting example of how important human capital strategies can be. And their business model is to run clinical trials for pharmaceutical companies. And so winning there means carrying out the trial successfully, staffing up the patients, and then ensuring that they come back at the right interval so we can know if the treatments that we’re spending a lot of money developing are actually efficacious across an entire population. So they need to be able to recruit the patients, but also ensuring that the employees look like the patients and can understand what they’re going through, understand where they’re from. And so IQVIA has been really thoughtful about the types of people they recruit, but also the experiences and the community attributes that they’re looking for. So they’re much broader in considering human capital as a core part of their business. And we’ve seen success because they were able to, for example, during the COVID vaccine trials, win a much larger portion of that work because of their speed and successful track record.

Vivian Lubrano: So with the world increasingly more diverse, investors more diverse, employees more diverse, companies that can actually harness this, what we’ve seen in the data is that they can actually deliver on innovation, on efficiencies, on productivities. And that is why as an investor, we should really care about how companies are implementing their diversity, equity, and inclusion programs.

Gayle Baldwin: And particularly cognitive diversity—I think that’s the opportunity a lot of investors haven’t fully appreciated.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.

References to specific securities discussed are not to be considered recommendations by AllianceBernstein L.P.

Learn more about AB’s approach to responsibility here.

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AllianceBernstein (AB) is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals, and private wealth clients in major world markets. We believe corporate responsibility, responsible investing and stewardship are intertwined. To be effective stewards of our clients’ assets, we strive to invest responsibly—assessing, engaging on and integrating material issues, including environmental, social and governance (ESG), and climate change considerations in most of our actively managed strategies. We also believe that strive to hold ourselves as a firm to similar practices that we ask of issues. Our stewardship practices, investment strategy and decision-making are guided by our purpose, mission and values.

Our purpose—pursue insight that unlocks opportunity—inspires our firm to act responsibly. While opportunity means something different to each of our stakeholders; it always means considering the unique goals of each stakeholder. AB’s mission is to help our clients define and achieve their investment goals, explicitly stating what we do to unlock opportunity for our clients. We became a signatory to the Principles for Responsible Investment (PRI) in 2011. This began our journey to formalize our commitment to identify responsible ways to unlock opportunities for our clients through integrating material ESG factors throughout most of our actively managed equity and fixed-income client accounts, funds and strategies. AB also engages issuers where it believes the engagement is in the best financial interest of its clients.

Because we are an active manager, our differentiated insights drive our ability to deliver alpha and design innovative investment solutions. ESG and climate issues are important elements in forming insights and in presenting potential risks and opportunities that can have an effect on the performance of the companies and issuers that we invest in and the portfolios that we build.

Our values provide a framework for the behaviors and actions that deliver on our purpose and mission. Values align our actions. Each value emerges from the firm’s collective character—yet is also aspirational.

  • Invest in One Another means that we have a strong organizational culture where diversity is celebrated and mentorship is critical to our success. When we invest in one another, we empower our employees to reach their potential, so that they can help our clients realize theirs. This enables us to partner with clients to design and deliver improved investment outcomes.
  • Strive for Distinctive Knowledge means that we collaboratively identify creative solutions to clients’ economic, ESG and climate- related investment challenges through our expertise in a wide range of investment disciplines, close collaboration among our investment experts and creative solutions.
  • Speak with Courage and Conviction informs how we engage our AB colleagues and issuers. We seek to learn from other parts of our business to strengthen our own views. And we engage issuers for insight and action by sharing ideas and best practices.
  • Act with Integrity—Always is the bedrock of our relationships and has specific meaning for our business. Unlike many other asset managers, we’re singularly focused on providing asset management and research to our clients. We don’t engage in activities that could be distracting, or create conflicts—such as investment banking, insurance writing, commercial banking or proprietary trading for our own account. We are unconflicted and fully accountable.

As of September 30, 2023, AB had $669B in assets under management, $458B of which were ESG-integrated. Additional information about AB may be found on our website,

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