Hedge funds run by women have outperformed a broader benchmark of alternative investment managers over the past five years, raising fresh questions about why there are so few female portfolio managers.
The HFRI Women index has returned 4.4 per cent over the past five years, compared with a 4.2 per cent return for the HFRI Fund Weighted Composite index, a broader gauge of hedge funds across all strategies and genders.
The figures support research by Rothstein Kass, the accounting firm, in 2012 and earlier academic studies that found hedge funds run by women outperform those managed by men.
Nonetheless the number of women in the industry remains small, with fewer than one in 20 hedge funds employing a female portfolio manager, according to a 2015 study by Boston’s Northeastern University.
By contrast, one in five mutual funds employ a female portfolio manager, according to Morningstar, the data provider.
Jane Buchan, chief executive of Paamco, a $24bn fund of hedge funds, said the lack of female hedge fund managers stems from the problems women face when trying to raise money from investors.
She said: “Women [hedge fund managers] have substantially less assets. That is a real issue, and it is not a performance issue. It is hard to win the money.”
“To get that same [level of assets as a man], you have to [outperform by] 200 basis points.”
KPMG, the accounting firm that acquired Rothstein Kass in 2014, last year found 79 per cent of US hedge fund professionals believe it is harder for women to attract capital from investors than for their male counterparts.
The disparity between the number of men and women working in the industry is one of the highest in finance, the Northeastern study found. It found that only 439 hedge funds employ a female portfolio manager, compared with 9,081 that employ a male investment manager.
When expanded to include women in marketing, compliance and administration roles, female representation at hedge fund companies rose to 21.5 per cent.
Because it is harder for women to raise assets when they do branch out on their own, the funds that thrive are ones that tend to outperform, according to the Northeastern research, which was published last year in the Review of Financial Economics.
Although the latest statistics indicate female hedge fund managers outperform over the long term, last year they underperformed the broader hedge fund index significantly. The HFRI Women index was up 2.2 per cent last year, compared with a 5.5 per cent return for the HFRI Fund Weighted Composite index.
Few new funds run by women are springing up. One exception is Margate Capital, run by Samantha Greenberg, a Paulson & Co alumna, which has raised about $200m after launching late last year.
Systematica, the quantitative hedge fund run by Leda Braga, was spun out from Mike Platt’s BlueCrest Capital in January 2015. It has accumulated $10bn of assets since launch, becoming one of the largest hedge funds in the world headed by a woman.
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