The gender of a fund’s manager should not matter. Financial assets, returns and track records are, after all, gender blind. What can make a material difference to investment returns, however, is diversity of thought and that is harder to achieve in an all-male team.
Teams that include people with differing life experiences, skills and perspectives should get better results. As Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said: “A mix of people making investment decisions, with different views, challenges and thought processes, are more likely to produce more resilient investment ideas.
“Ethnicity, background, education, religion and gender – diversity of thought can come from many different places. Much like a well-diversified portfolio requires investments in different geographies, asset classes and types of company to give it the best chance to thrive.”
Yet only 12% of investment trusts are managed by women, according to the Association of Investment Companies, and the statistics are similar for open-ended funds. Shockingly, it took until 2022 for the number of women running funds to overtake the number of managers called Dave.
Jean Roche, lead fund manager of the Schroder UK Mid Cap trust, said: “This stubbornly low 12% figure is presumably off-putting for potential new female entrants. It feels like a very risky position for financial markets to be in – a bit like a fund manager having 88% of their exposure in one sort of stock or theme.”
So why are there so few women in fund management?
Helen Steers, co-lead manager of Pantheon International, answered: “Traditionally there have not been enough women entering the fund management business, and even when they do get into the profession, the industry has not been good at retaining and promoting women. In the past recruitment has focused too much on people coming from investment banking or accountancy, and the wider talent pool of capable women has not been sufficiently tapped.”
The Treasury Committee's 'Sexism in the City' report, published today, said many women struggle to progress their careers after taking maternity leave.
Dame Amanda Blanc, chief executive officer of Aviva, said women returning to work after career breaks "were not being supported, they came back in less senior roles or part time and then were written off by the middle management”.
Flexible and hybrid working options improved after the Covid pandemic but there are concerns that these benefits could be lost if firms push back towards presenteeism office working cultures.
However, there have been improvements in the proportion of women holding senior roles, the Treasury Committee's report said.
Many organisations are working hard to improve diversity in the City, from the Diversity Project to Level 20, which focuses on private equity. Asset managers’ graduate schemes are moving towards an equal gender intake, although a greater challenge is to ensure that mid-level and senior women don’t leave the industry.
There should be a call for more female fund managers given that statistics suggest women are better investors than men. Indeed, women using interactive investor’s platform achieved higher returns than men over three years and longer. From January 2020 until December 2023, women’s portfolios returned 14.6% versus 13.5% for men in median terms.
For professional fund managers, the skills required are ones that many women possess in abundance, said Steers.
“In addition to an aptitude for robust quantitative analysis, effective fund managers need to possess a talent for strong qualitative analysis, being able to assess investment strategies, team and organisational dynamics. Being a good listener, observer and communicator, able to consider all the evidence to form an investment opinion, and then translating this into a winning portfolio strategy is hugely challenging, but also deeply rewarding,” Steers explained.
“I think women enjoy this multi-faceted and demanding profession, and excel at the collegial and collaborative aspect of the job.”
Things are improving but the glacial pace needs to pick up, especially when firms are fighting to beat their benchmarks. Having a diverse team seems an obvious step towards gaining an edge over both the market and rivals.