Industry | 2009.10.19
Women 'have a midas touch' on hedge funds
Hedge funds run by women fall half as much during financial crisis as those managed by men, research shows
Hedge funds run by women have fallen only half as much during the financial crisis as those managed by men, research shows.
The value of female-managed funds dropped by 9.6% in the past year, compared with a plunge of 19% for the rest, according to Chicago-based Hedge Fund Research.
Women investment managers also performed better in general over the past decade, with an average annual return of just over 9%, while hedge funds overall delivered 5.82%.
These findings were showcased in a research paper presented at the Women\'s Forum for the Economy and Society at Deauville at the weekend.
They are supported by Hedge Fund Research\'s "diversity index", which tracks the performance of other minority groups along with women. Funds run by women accounted for roughly 50% of the index, which returned an average of 8.21% a year since 2003, compared with 5.98% for the field as a whole.
Despite women\'s apparent prowess, in early 2008 they were running just 3% of the $1.9tn then invested in hedge funds. Female hedgies such as Leda Braga at London-based BlueCrest Capital Management remain in a tiny minority.
The paper by the US National Council for Research on Women says that women also suffer "capital punishment", finding it harder to raise the finance to start up fund management firms and experiencing more difficulty in attracting money from investors. The average size of funds run by women and minorities is $73.7m compared with $308.2m for men.
One female asset manager said: "With a man ... you might dismiss something as a bad day, with a woman it\'s seen as a sign of instability. Somewhere, buried deep in the psychology, is the notion that people don\'t trust us with their cash."
The NCRW argues that a better mix of male and female investment styles would lead to greater stability on markets.
Linda Basch, its president, called for a change in the chilly workplace culture for female investment professionals and said women needed to gain critical mass in the finance industry: "It is uncomfortable to be the only skirt in the room. This is a time when we need women with their more tempered approach to risk, as well as men."
Jacki Zehner, a former partner at Goldman Sachs, who initiated the report, added: "Where women are present at decision-making tables, the quality of those decisions improves."
The NCRW\'s work supports the views put forward by investment banker Ros Altmann and Professor Charles Goodhart of the London School of Economics at the Treasury select committee on women in the City last week. They argued that the financial crash was less likely to have happened if there had been more women in senior positions in the financial industry.
Professor Goodhart said the more cautious and long-term outlook of women could prove a more positive trait than the more aggressive, risk-taking stance of men.
The NCRW report highlights a growing body of academic work suggesting that women fund managers typically take less risk and adopt less extreme investment styles than male managers, including research from the University of Cologne in 2005.
A 2008 study of men on trading floors by Cambridge University posited that male traders may be afflicted with a boom and bust in their hormonal cycle. During booms, their testosterone soars, leading to an increased willingness to take risks, but in a crash, levels of the stress hormone cortisol levels spike, making them shun risk altogether.
A recent paper from the University of California suggested that men who felt they were being observed or judged by their peers tended to make riskier investment choices at times of crisis in an attempt to assert their dominance over rivals. Women were found to make consistent decisions in all types of situation.
For more information, please visit
http://www.guardian.co.uk/business/2009/oct/19/women-hedge-funds
