Who Runs the Fund? Girls

Female hedge fund managers have consistently and soundly thumped their male colleagues. File photo.

Female hedge fund managers have consistently and soundly thumped their male colleagues. File photo.

Published Jun 9, 2024


By: Vanessa van Vuuren

A recent Fidelity Study found women investors outperform men by 0.4% - compounded over time, this can make a meaningful difference. Daniel Crosby’s book The Laws of Wealth revealed this outperformance is found at professional level as well.

Female hedge fund managers have consistently and soundly thumped their male colleagues. Goldman Sachs’ study further found that 48% of female-managed hedge funds outperformed the market from March to August 2020, with women-led funds faring better during the Covid-19 crisis. Despite this, the 2024 Alexforbes Manager Watch Survey found the industry remains behind in terms of gender parity, with a little nod to the notion of true transformation.

What factors foster great fund managers?

There are several theories behind women’s robust investment performance, including longer decision-making processes, consideration of other viewpoints, unconventional thinking, and less overconfidence, with more focus on risk management. It has been postulated that female fund managers are naturally more risk-averse than their male counterparts, which can prove valuable over time in the portfolio management world. I’m not entirely convinced of this. My sense is that success comes down to an individual’s specific traits rather than the gender of that individual.

I believe that what makes men and women astute fund managers are the same characteristics: patience, adherence to a longer-term orientation as an investment framework, a thoughtful degree of risk management, high work ethic, and a vivid sense of curiosity to learn and think deeply about the investments one is making.

A strong, diverse team is also imperative. My starting point is always my team, the quality of the research we generate, and how we analyse the market to underpin our decision-making. We apply the same level of modelling, deep thought and debate that we would do to any large cap investment case before investing. We encourage sharing of multiple views and ideas, which contributes to our robust equity research process.

‘Time in the game’ has also emerged as a successful ingredient for the fund’s performance; having been through many market cycles, we can constantly refine blind spots in our process and learn from our mistakes. Finally, passion, appreciation for what we do, and a healthy dose of humility are some of the vital, softer value-adding aspects.

How to diversify the asset management industry?

The gender parity issue is certainly not unique to our industry. I see it as a deep challenge with roots in pre-feminist eras, where women were largely relegated to child-rearing roles within their family constructs, without equal education opportunities and fewer rights than men across many civilisations and cultures.

These dynamics have shifted in modern society; however, women still often bear the primary responsibility for child-rearing in our societal construct today, which naturally makes it more difficult to juggle a career. Critically, every woman will make her own choice; there is no right or wrong. In my life, I embrace being a full-time working mom.

Not all women want children nor are necessarily having them, so this is not the only reason for the low female count.

We need more female role models and female progression to set examples to motivate more women to persevere in this industry, propelling a virtuous cycle to inspire more females into the sector. A critical aspect of this includes inspiring young, aspirational women at tertiary institutions to study this field, with active recruitment to ensure an employment trajectory. There’s no shortage of high-achieving young girls in our education system, so we should be working with them at school level to plant the seeds for this career choice.

For those already in the system of formal employment, we need more formal mentorship frameworks to uplift young investment professionals and motivate them to pursue roles in fund management. This requires commitment from incumbent women in our profession. Sharing our stories is helpful to break down preconceived notions that this is not an optimal career choice for women. It’s critical for those of us that are thriving in this industry to spread this message.

Key lessons for women powerhouse investors:

Parity needs to be pushed at a retail level of investing as well. A study by BNY Mellon found just 1 in 10 women globally said they understood investing, just 28% of women felt confident to invest their money, and 45% of women saw the stock market as too risky. The same study estimated that if women invested at the same rate as men, the extra assets under management would be larger than the UK’s GDP.

My suggestions for building long-term wealth would be:

To adopt a long-term focus on saving and preparing for life’s eventualities. Pivot away from pure consumption and instant gratification to develop the discipline to save money early on, while being cautious with debt as a financial tool. Many women already fulfil this role in their families and think like this innately, so it’s about building on this.

Prioritise saving for children’s education and retirement; South African society has some way to go here, as we’re generally a nation of spenders not savers.

Remember the age-old power of compounding; setting aside even a small monthly allocation to a savings product early on can have a profoundly positive impact later. The absence of this can be quite devastating, stripping an individual of financial independence in the long run.

Women need to see themselves as investors as well as savers; currently just 33% of women say they perceive themselves as investors. It’s critical that women gain the financial confidence to upskill themselves in investing, take on some risk, and diversify their portfolios according to their specific risk tolerance and time horizons.

Positively, a study by FT Advisor found UK women start investing earlier than men; we need to encourage all young people to start their investing journeys early to capitalise on the magic of compound interest. Sanlam’s Financial Confidence Index recently revealed Generation Z and Millennials are more likely to have investments than older generations. Again, we need to capitalise on the optimism and openness of young people to set solid investment foundations early on.

A truly transformed industry takes collective will and commitment. More women investors will inspire a positive global tide of change, bringing increased financial security and economic growth at a household, country and continent-wide level.

* Van Vuuren is the portfolio manager and equity analyst at Sanlam Investments.