28 BARRON’S March9,2020
garwal and Nicole Boyson found that hedge
funds that were still open and had at least
one female manager outpaced male-managed
funds. That’s consistent with the idea that
female managers need to perform better for
their funds to stay operative.
In an industry where returns are every-
thing and finding off-the-radar investments
is a mission, it’s a puzzling phenomenon.
“A bunch of really good managers are
managing less than optimal assets. It’s
something asset allocators talk about every
day: finding good managers who can gener-
ate alpha before everyone else,” says Juan
Martinez, chief financial officer of the
Knight Foundation, which has done its own
research on diversity in investing.
“There is an enormous culture of opacity,
pure bias, and—even more pernicious—
incumbency,” says Robert Raben, executive
director of the Diverse Asset Managers
Initiative and head of consulting and public-
policy firm The Raben Group.
Data are seen as crucial to overcoming
those challenges, but they’re hard to obtain.
In a survey by The Raben Group of invest-
ment consultants—the gatekeepers between
asset managers and investors such as pen-
sions and endowments—just nine of the 30
largest firms provided any diversity data.
Still, Raben sees momentum, with more
companies looking to change. A growing
body of research illustrating the value of
gender diversity is a catalyst. For example,
companies with at least 30% women in
management have enjoyed higher subse-
quent one-year returns on equity since 2010,
according to research by Bank of America.
One area the industry is focused on is
casting a wider net when recruiting. There
are signs of progress here: The pool of
women seeking a charter from the CFA In-
stitute, a postgraduate professional qualifi-
cation for investment and finance profes-
sionals, has risen to 32% of all candidates,
compared with 26% in 2015.
More work needs to be done at the mid-
career level, though, as many women drop
out of the industry at that point of their
working lives. It’s not clear why, but Lietz
says it could be because of the internal
politicking needed at this juncture in
finance careers. Not only do studies show
that women are less comfortable with self-
promotion, but often they are not in the
same networks as their male peers.
“A woman may not get to work with the
most powerful partner or be sidelined in an
area that doesn’t command the same level of
respect within an organization as an area
that generates higher returns,” Lietz says.
“If you talk about finance, particularly in
private markets where your results may not
be known for years, it is very relationship-
oriented, and networking is very important.”
That bias shows up elsewhere. Despite
having track records, seasoned women are
sometimes lumped into an emerging man-
agers bucket that may get a token allocation
from pensions or endowments, rather than
being considered in the mainstream.
But there’s reason for cautious optimism.
Among institutional investors, such as
foundations and endowments, the ranks of
women are greater than at asset managers,
and the share of women doesn’t fall off in
the midlevel ranks. Women fill 42.2% of
midlevel roles at endowments, 41.6% of ju-
nior roles, and 28.2% of senior ones, accord-
ing to Preqin. Some of those institutional
investors, including those applying environ-
mental, social, and corporate governance, or
ESG, factors, keep an eye out for diversity
when allocating money and asking for more
data. In an industry driven by numbers, that
may be what finally creates change.B
Across different U.S. fund categories,
women account for a smaller share of
managers than in 2000
Where Are the Women?
Among alternative assets, venture capital
has the highest percentage of women
in senior roles.
0%
Passive
Active
Fixed-Income
Stock
Hedge Funds
Private Debt
Private Equity
Real Estate
Venture Capital
50%1015 10 15 20 25 5
Source: Morningstar Source: Preqin Pro
2000
2019
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