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Making bank

Lack of female portfolio managers might have negative impact for investors

By WITW Staff on April 15, 2017

According to a report by Morningstar, an independent investment research firm, only one out of five funds have at least one female manager, though women are more likely to have obtained chartered financial analyst credentials than their male colleagues, reflecting a gender imbalance that might have a negative impact on returns for investors. “The data may suggest that women need to be more credentialed than men to win a fund-management role, reflecting a potential hiring bias,” the report, which looked at more than 26,000 fund managers registered in 56 countries, said. It concluded that the investment fund industry is “drawing from a relatively limited talent pool.”

The United States is particularly problematic, with only about 10 percent of managers being women (Singapore is the best scoring country, with about 30 percent of managers who are women). The analysis also stressed the fact that this gender imbalance could be leading to lesser returns. Women are 36 percent more likely than men to be overseeing passive funds (which are not actively managed and, rather, track index funds) that are cheaper and get better long-term results. Nevertheless, women might be even better suited to managing active funds because they make fewer risky and costly trading decisions than men. “In downturns, women are more likely to hold on to their investments. In rallies, women are less likely to be looking for quick wins,” the report says. “This invest-with-conviction approach may be especially beneficial for active managers, which face cost scrutiny, and have largely lagged passive funds with a conventional higher-turnover approach. It is unfortunate, then, that women have lower odds of managing active funds.” The low numbers of women in higher-ranking positions in the finance industry came up, among a host of other topics, in the first episode of Women in the World’s new video series She-Suite. In that episode, Kathy Murphy, talks about how the finance industry was “created by men for men.” Watch the complete episode below.

Read the full story at Marketwatch.


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