Women are underrepresented in the financial industry, in particular in asset management. That's probably got to do with the fact that investors prefer to entrust their money to men.

It's not exactly breaking news: in the finance industry, women are underrepresented in management, they earn less for they same work – and things have hardly improved over the years.

In asset management, the statistics make for stark reading: only 10 percent of the fund managers worldwide are female, a study by «Citywire» revealed. In detail: 14 percent of the 23,810 fund management teams surveyed for the «Alpha Female Report» contained women. And 7 percent were managed by women.

Performance Isn't the Problem

The conclusion would seem obvious: asset management is a bastion of male chauvinists. The reason for the underrepresentation can't be the performance of the women in the industry, the survey also revealed.

Women achieve the same yields with their strategies as their male colleagues, «Citywire» reported. Both sexes have very similar performances over the medium term, but women achieve a more even yield over the years. Investors might therefore want to prefer female fund managers, because their targets are more in tune with the performance achieved by the women.

Customer-Based Discrimination

With the performance gone as a reason for the underrepresentation, others must exist. One important factor is the discrimination by customers. Women on average manage $315 million with their funds, men an average $533 million, according to the «Alpha Female Report». This difference has been investigated before and there is no rational explanation for the gap.

The reason are the investors themselves. Customers prefer men. When female fund managers assume the lead for a fund, customers on average pull out more money than when a man takes over – customer-based discrimination is the term used for the unseemly phenomenon.

Rational Hiring Policy – But Far-Sighted?

Hence, investors are sexist and men enjoy a higher level of trust than women. An experiment proved as much: investors were asked to put their money into two identical index funds. They knew that one was managed by a woman, the other by a man. The fund managed by a man attracted far more money than the other managed by a woman.

The only rational behavior therefore is the hiring policy of asset management firms: if they know that male investors don't trust women, they will hire men instead of women. Of course, rational doesn't equate to far-sighted and desirable.