• Equities

Diversity of thought and the collective intelligence challenge

Exploring neurodiversity, and why it matters when investing.

1 minute read

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One manifestation of the behavioural dynamics that present themselves as security mispricing opportunities is the impact of behavioural pitfalls in the investment decision-making process. As often been proven, a bunch of smart, hardworking people do not necessarily make the best decision makers. Rather, having  high-conviction, non-consensus views (or ‘variant perception’ in investment jargon) requires different thinking styles.1

The most significant trend in human creativity is the shift from individuals to teams, and the gap between teams and individuals is increasing with time

Increasingly, we have been paying attention to the need for diversity of thinking and communication styles to avoid common pitfalls in both individual and team-based blind spots and the navigate the ever-present dangers of group think. Our contention is that different ways of thinking require not just diversity in the traditional sense of, for example, gender, but an additional layer of variation: neurodiversity, or the diversity of human brains.

Work undertaken by The Diversity Project, to which Aviva Investors is an active contributor, into the subject concluded that neurodiversity ‘can make a particularly important contribution to overall diversity of thought’ in the workspace.2

Throughout our hiring processes and team structure, we seek to incorporate this desire for varying mindsets and attempt to give these differences chance to thrive once in place. Too many large companies that hire unusual and enquiring minds end up smothering individuality with cultures that are formulaic and pervasive, thereby standardising behavioural norms.3

We encourage, and indeed our investment success depends on, individuality of thought and are alert to maintaining safe and open spaces for expression. As James Ware and Michael Falk point out in their review of equity teams within the investment community, ‘cognitive diversity is an important tool in finding a good decision, since it can correct for individual blind spots which might lead to bad judgement’, a finding that resonates with our understanding of the pressure to conform across the industry.4 A fundamental focus on neurodiversity should be the bedrock to rigorous stock debate and can build on diversity of opinion and perspective in a supportive, trust-based team set up.

Key risks

For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.

The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency exchange rates. Investors may not get back the original amount invested.

Emerging markets risk

The fund invests in emerging markets; these markets may be volatile and carry higher risk than developed markets.

Derivatives risk

The fund uses derivatives; these can be complex and highly volatile. Derivatives may not perform as expected, which means the fund may suffer significant losses.

Illiquid securities risk

Certain assets held in the fund could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.

Concentration risk

The fund invests in a small portfolio of securities. Losses from a single investment may be more detrimental to the overall fund performance than if a larger number of investments were made.

Authors

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Global Equity Endurance Fund

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