Investment funds run by women are rare in the wealth management industry — a fact that has remained unchanged for two decades.
New research by Investment Metrics, a Confluence company, found that only 13% of 242 active manager portfolios across the world had a woman in the lead or co-lead position as of last December. The percentage was the same in June 2021, according to the institutional investment consultant firm in Norwalk, Connecticut.
But the gap goes back further — much further. Globally, the share of female fund managers has consistently remained roughly
"Change is going to happen if we're deliberate about it," said Amanda Pullinger, the CEO of New-York-based non-profit 100 Women in Finance, which advocates for more diversity in the finance industry. "We're not going to create change in the short term, we need to think longer term about creating opportunities."
Gender bias in the financial services industry has been an issue for decades, with one notorious low point in the Smith Barney "Boom Boom Room" scandal of the 1990s. A survey conducted by CNBC and LinkedIn in 2018 found that women were
"Portfolio management can be very competitive and have a harsh culture. This is not necessarily a barrier for women — they can deal with pressure, but may have a preference not to," said Lucy Macdonald, the chief investment officer global equities at Allianz Global Investors, in the report. "Overall, the more negative perception of the sector since the financial crisis appears to have impacted its attraction as a destination for female graduates to a disproportionate extent."
'Power issue'
Amanda Dalton, a portfolio manager for more than 20 years, said women who get into investment and portfolio management teams often find a rigid system that prevents them from getting to the top, keeps them from being credited for their work and from building a track record of fund performance.
"It's a power issue, but it's also the way people are hired in, the positions they're put into, and how that limits their options on getting that track record," Dalton said. "The value of their contribution is dispersed or they're really not getting the credit because they're behind other people." Dalton is a portfolio manager at Nia Capital, an all-women sustainable investment firm in Oakland, California.
For Pullinger, firms that have been successful in bringing more women put in place deliberate initiatives driven from the top, not by a diversity, equity and inclusion department. "If we create an environment where women can believe that they can be in that role, where that role isn't perceived to be a male role, then we will see progress," she said.
The Investment Metrics research found that even though women are underrepresented in portfolio management, there were significant institutional net in-flows to certain female-led portfolios last year despite the brutal stock market. The biggest dollars went to Rupal Bhansali, the chief investment officer and portfolio manager at Ariel Investments , where Bhansali saw more than $700 million of combined institutional in-flows into her International Equity and Global Equity portfolios.
"An increasing amount of institutional asset allocators are much more aware of the diversity of a portfolio management team and will factor that into their decision making on manager hiring activity," said Scott Treacy, a research consultant at Investment Metrics.
Women for the investing win
Research shows that women in portfolio management often outperform their male peers. Global large-cap equity portfolios led or co-led by women had an active median return of -2.6% year-to-date through the end of last September compared with various leading indexes they follow, according to Investment Metrics. Meanwhile funds run by men did 5.3% worse than their style benchmarks.
Pullinger said it's important to create more visibility for female fund managers so that others are encouraged and see a pathway to investment and portfolio management roles. The nonprofit has an initiative that connects 500 female fund managers to conferences and industry event organizers to help them build their brand and get the attention of institutional investors.
"Until we start focusing on changing the perception of what an expert looks like in the industry, we are not going to see a change in demographics," Pullinger said.
More female CEOs in asset management firms could also help push towards a more diverse team. The number of women in that top position increased from 7% in 2021 to 11% in 2022, according to Investment Metrics. Of the 13% female led-portfolio managers, 34% were with firms that had a female CEO, the data showed.
"To leave out such a large portion of the population of the decision making is harmful and has negative ramifications when it comes to allocating capital and investing," Dalton said. "A diversity of viewpoints and variety of perspectives tends to outperform a monolith viewpoint, which is where we're coming from right now."
