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Female touch is boosting hedge funds

Date: Wednesday, February 17, 2010
Author: Philippa Aylmer, Guardian

Women are excelling in an industry where their innovative, 'risk-intelligent' qualities are paying dividends

Unlike most lists of its kind, our survey of the top 50 female hedge fund managers does not include details of the personal or family lives of the women involved. Had we tried to include them, some of those listed would probably have asked for their names to be removed. Hedge fund management is a field in which women are enjoying increasing success both in terms of performance and promotion but, like many City jobs, one in which women like to ensure the focus remains on their working life.

The survey, conducted for PricewaterhouseCoopers by The Hedge Fund Journal, found a growing number of entrepreneurial and accomplished women playing leading roles in hedge funds. This is despite the fact that women manage only 3% of the $1.5tn invested in hedge funds globally.

The 50 leading women in hedge funds survey recognises the increasing contribution that women are making to the development of the industry and proves that opportunities are opening up for more women to progress. The hedge fund industry is not just about alpha males. Rather, it is one founded on innovation and flexibility, attributes common to many women.

Undoubtedly the juggling act between domestic and professional life exists for all these women and sacrifices have been made, but the message is that these women have reached positions of seniority as a result of their professionalism, commitment and entrepreneurial skills. Now, women are working in key portfolio management roles as well as compliance and business development and there is evidence to prove their success.

Between 2000 and 2009, women-owned funds delivered an average 9.06% annual return, compared with a 5.82% average for all funds, according to data from Hedge Fund Research. And a report by the US-based National Council for Research on Women (NCRW) published in June 2009 found that in general, male fund managers are more likely to adopt a more risky approach than female fund managers. The NCRW found that women are more risk-averse and take a "more holistic and risk-intelligent investment approach", and the HFR figures show that being risk-averse can pay off. Many who have watched the recent financial crisis closely would agree.

To be fair, women who work in the hedge fund industry have had an advantage over their female counterparts working in other financial sectors. The recent growth of the industry, its appetite for innovation combined with the relative youth of its employees means that change is constant. Compared with financial services providers, hedge funds generally have flatter hierarchies with the responsibilities more diffuse. This flexibility is attractive to women (and men), but for women it makes it easier to have an impact on the range of roles that exist in a contemporary firm.

For hedge fund firms, there is an opportunity to be innovative in mixing flexible working arrangements and provisions for leave to assist women (and men) in family roles. This also has the effect of reducing costs associated with the loss of talent and experience that inflexibility may bring.

All this offers scope for optimism for women, but there is still some way to go. A quick look at the FSA database of authorised individuals shows that the breakdown in gender in the financial services sector is still heavily skewed in favour of men. Nevertheless, in an industry that has received its fair share of criticism and setbacks thanks to the financial crisis, it is comforting to know that the number of women in leading roles is growing.