Why is there a lack of women in fund management?

Business-Office-Workers-Generic-General-Finance-700x450.jpgCompany culture, lack of trust and lack of flexibility in the fund industry are keeping women away from senior management roles, experts say.

Recent Tilney Bestinvest research shows very little progress has been made in gender diversity among fund managers as fewer than one in 10 fund managers are female, trailing other professions such as law and medicine.

Women managing or co-managing Oeics, unit trusts and investment trusts account for just 8.5 per cent of fund managers, the study shows.

In the largest five Investment Association sectors – UK Equity Income, Mixed Investment, Corporate Bond, UK All Companies and Global – this drops to 7.8 per cent, with women slightly better represented in specialist sectors, such as China, tech and telecoms, and Japanese equities.

Last year, the research analysed just the top five sectors finding only 7 per cent of fund managers were women, with the UK Equity Income sector the worst for diversity, with 95 per cent of funds run by men.

Managing director at Tilney Bestinvest Jason Hollands says gender imbalance in the asset management industry is an “irrefutable fact”.

He says: “The unanswered question is why this is the case when women represent a large ratio of university graduates and improved diversity is evident in many other professions? For example, almost half of GPs are women, one in four partners at law firms are now women and the portion of women on the boards of FTSE 100 companies is now 26 per cent.

“It’s clearly not healthy for the long-term success of the industry to have such an extreme imbalance like this because it suggests it is not effectively drawing upon the widest pool of talent.”

This month the Investment Association launched the Diversity Project to tackle, among many issues, gender diversity in the industry, which the firm says is at “unacceptably low” levels.

SCM Direct co-founder Gina Miller says: “What you need to change is the culture in an organisation, starting from recruitment. If you look at the management compared to co-managers you also have a more staggering low figure and that has not really moved through the years.”

But despite the poor representation of women in asset management, a greater percentage of female fund managers are highly rated by the fund rating agencies.

The FE Alpha Manager list, which rates the best managers in the current market, added two female managers this year, bringing the total number of women to 11 and representing a 10 per cent increase compared to a year ago. In total there are currently 189 FE Alpha Managers.

An FE spokeswoman says: “These ratings assess performance throughout a manager’s entire career, across all the funds they have managed, and are specifically designed to reward skill, consistency, alpha generation and downside protection.”

But Miller says fund management is judged “by presence rather than output”.

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She says: “There are also structural and reputational issues and luck of trust in the sector, as it is often not seen as an ethical place to work for young women.”

However not all firms lag behind in terms of gender diversity.

Liontrust Asset Management currently has 16 fund managers, of which almost 19 per cent is female and it is a mix of co-managers and managers among six teams.

Carolyn Chan is co-manager of the firm’s Asia Income fund. She started in the equity industry as a broker in 1992 but switched to fund management six years ago.

She says: “When you run a fun you try to establish a track record, it is a long-term industry, so you need to stay at the firm for quite a long time while on the sales desk there is more flexibility. Education and interest in the industry also need to be encouraged more.”

Columbia Threadneedle Investments head of US equities for EMEA Diane Sobin previously held portfolio manager roles at ZurichScudder, JP Morgan, Oppenheimer and Dean Witter Reynolds.

She says: “In my career I have worked for firms that have a good mix of senior female asset managers. In an industry where there is transparency in performance such as fund management, women, and even more importantly, diverse teams enhance investment results by perhaps increasing robust debate.”

Close to 30 per cent of Columbia Threadneedle Investments’ employees in the EMEA region are women, including four out of 13 senior desk heads.

This compares to recent Morningstar data, which suggests that within the 20 largest US asset managers only 11.1 per cent of fund managers are women.

In 2015, Columbia Threadneedle introduced disclosure of gender metrics to have both male and female representation on candidate lists, including guidelines for recruitment partners to advance more women to the interview phase.

Liontrust’s Chan says: “What female fund managers really want is to do better than a peer group and outperform and that is much better rewarding than any sales you can make.”

Expert view: Discrimination is now more subtle

In 1992 when I started in the financial services industry a lot of women were trying to be like men and the industry was far more open than it is today.

I believe that today the situation is worse than it was 20 years ago, as discrimination has become more clandestine. Companies spout equality quotas and agendas but under the surface the discrimination has become more subtle and nuanced.

At A-Levels in schools women are doing very well compared to men, but where are they going?

Women tend to choose jobs and professions where they feel they are adding value and integrity. But it is also in the structure of many fund management firms where you do not see support for women to get up to the ladder.

The world of fund management needs to reform itself into one that can be better trusted and valued, then communicate that value which will go some way to attracting bright young women.

Gina Miller is co-founder at SCM Direct