And Yet, Gender Disparity is Still an Issue
In celebration of 100 years of women being allowed to vote in the United States, Goldman Sachs published an interesting study. In it new questions were raised about the progress made by the investment industry in addressing issues of gender diversity.
There Are Very Few Female Fund Managers
The Goldman Sachs analyzed 496 United States-based large-cap equity funds with a combined asset base of around $2.3 trillion. It revealed that most of the management teams responsible for these portfolios were entirely run by males. Funds led by women remain rare across the investment industry despite the ever-increasing evidence that better results are achieved by teams that are made up of diverse genders. Out of nearly 500 teams analyzed, only 14 were run by all-female management teams. An additional 49 funds were classified as female-managed (one-third of the team management by women), which means they were run by portfolio management teams consisting of one-third women. Conversely, 380 of the funds had all-male teams.
Exemplary Women In Fund Management
Interestingly, thus far in 2020, funds managed by females delivered returns of 57 basis points in comparison to their benchmarks. Funds run by males performed far worse with average returns of 164 base points. Susan Bao has been responsible for the $1.8 billion Tax Aware equity fund for 12 years. The fund has outperformed its benchmark by 27% this year and was ranked as the top women-only managed performer. Kirsty Gibson is a member of the portfolio management team of Baillie Gifford’s US equity growth fund, which outperformed its benchmark by a whopping 55% this year and was ranked as the leading female managed fund.
Why The Disparity?
Goldman Sachs chief equity strategist for the United States, David Kostin said: “Even after adjusting for risk, female managed funds outperformed their male counterparts amid the coronavirus-related market swings.” According to Kostin, gaps in performance were partly due to divergences in how female managed funds and other large-cap funds were positioned in the IT and financial industries. Funds managed by a minimum of a third female portfolio manager hold smaller underweight in the IT sector in comparison to their male managed counterparts. The overweight position held by funds managed by females in the financial sector has been smaller in 2020 than funds controlled by men.
The Solution
Investment consultants and industry leaders are beginning to step up their efforts to improve ways in which diversity is incorporated into manager selection processes. Companies like the data provider Morningstar have noticed that the gender of a fund manager has no impact on bond funds or equity. The company also found that women accounted for only around 14% of more than 25,000 fund managers working across the globe, and this was unchanged since 2000 despite greater diversity in public companies being increasingly pushed. A representative of Morningstar stated that they are exploring gender, racial and ethnic data to establish whether increased diversity results in better results. Through efforts like this, women like Susan Boo and Kirsty Gibson can continue to thrive and more like them can join the ranks.
