Female fund managers are still underrepresented in portfolio management. This contrasts with investors’ desire for more diversity, Tatjana Greil-Castro writes in an essay for finews.first. What is to be done?
This article is published on finews.first, a forum for authors specialized in economic and financial topics.
We are 200 years away from parity in portfolio management, according to Citywire’s «Alpha Female Report 2020». Progression has been at a snail’s pace, and asset management is still an industry where men account for the majority of senior roles.
Yet, despite this slow progress, there are signs that things are changing. There has been a steady rise in the number of mixed portfolio management teams, and a decline in the (disproportionately male) «star manager» culture.
«Culture change requires time, but the industry is currently failing to attract young women today»
Diversity is becoming more important for investors. There is mounting evidence that funds managed by more diverse teams, or by women-only teams, produce better returns than those managed solely by men, such as the most recent report done by Goldman Sachs looking at U.S. mutual funds.
Culture change requires time, but the industry is currently failing to attract young women today. Asset managers are facing the challenge of how to retain female talent. There is still a perception amongst some that, as a woman, it will be difficult to succeed in this industry. That it still does not offer sufficient incentives to make it a career option for future generations of young women. The increased focus on sustainable investing may entice more women as it can fulfill their desire to work in an industry in which social and environmental issues are a key component.
«A fund managed by a woman can become like an extra child to be responsible for»
As a female portfolio manager, throughout a career of almost 25 years, I have experienced firsthand the difficulties many women face, and why a career in asset management is potentially perceived as unattractive. This may be because of a lack of understanding of the industry and the opportunities that it can offer. Roles in asset management can be very rewarding, interesting, and challenging. Portfolio Management with all that it entails, not least the need for a strong teamwork ethic, requires a skill set that women often have, and can strengthen over their careers.
There is also the issue of flexibility. The work/life balance that financial companies promise is often viewed very skeptically, an aspect of a career that women tend to focus on more than men. As a mother of four school-age children, I understand that a fund managed by a woman can become like an extra child to be responsible for.
When my children were born our team was still very small, but I was fortunate in the sense that I had the support from the firm to work flexible hours, and from home. However, many women have historically not felt comfortable asking for this, or had an inflexible employer. If we want to see better diversity, it is increasingly important that companies allow female portfolio managers flexibility to do their job in a way they can combine work and family responsibilities.
«There are a number of things that firms can put in place»
While increasing the number of female employees is a key challenge, retention and nurture of existing talent is also important. According to the same «Alpha Female Report», the turnover rate for female fund managers was 42 percent in 2020, compared with 27 percent for men. This is important for two reasons. One, fund managers tend to be one of the highest-paid employees, and this affects the gender pay gap. Second, many studies have shown that by losing women, companies also lose a key component in the investment decision process.
I am a firm advocate for a more diverse asset management industry by often engaging on the subject both inside and outside my organization. There are a number of things that firms can put in place to create a more diverse and inclusive work environment. One is to show that the industry can be a genuine career choice for women, a place where they can develop professionally and personally. I believe flexible working models, especially for mothers, can help.
«The pandemic has been eye-opening for employers»
In this regard, the pandemic has been eye-opening for many employers. As working remotely became the norm, this has provided the flexibility to combine family with having a satisfying career. It has also helped to erode the scourge of «presentism», which has always disadvantaged women, to create a more inclusive work environment.
The establishment of women’s networks inside and outside individual companies, as well as strengthening the professional profile for women fund managers in the recruitment process, can help too. There is still a long way to go, and big changes do not happen quickly. But now is the time to be bold.
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