Women are managing wealth, in numbers that are ever-so-slowly creeping up, and outperforming to boot. There’s good news and bad news on this asset management front. The severity of the financial crisis prompted the National Council for Research on Women (NCRW) to look into the causes of the financial crisis and “explore the exclusionary biases that are present in the business of money…” adding, “the crisis itself compels us to ask if we can afford NOT to tap the differing experiences, perspectives and investment styles that women bring to fund management…”
“Women in Fund Management: A Road Map for Achieving Critical Mass – and Why it Matters“ posits that the financial crisis is, “a dramatic lesson that it profoundly matters who manages our money and how investment decisions are made.” The report asks: “why there are so few women at the top levels of professional money management, and, whether it matters.”
The report says that in the overall American economy “women started new businesses at twice the rate of men and represented one-third of all business owners, generating about $939.5 billion in revenues,” citing numbers from the U.S. Census Bureau’s 2002 Survey of Business Owners. Women make up 43% “of Americans with gross assets of $1.5 million or more,” the report adds–almost 1.2 million women–according to the Internal Revenue Service’s 2004 Personal Wealth Tables.
First, the bad news:
The NCRW report argues that women, as of 2008, managed only 1% of mutual funds and 3% of hedge funds. But those who manage those funds tend to outperform. “Women,” the report explains, “constitute only 16% of executive and board positions in the financial services and less than 10% in fund management.”
Now the brighter news:
But the women in fund management tend to outperform: The NCRW report also notes that at Pax Funds, women make up half of the six U.S.-based portfolio managers–and that is “by design.” The report adds that Pax President and CEO Joe Keefe says the firm, “has found that women give careful attention to risk, focus on the long term and often ask more penetrating questions than men in building their analyses.”
An April 2010 article, “Outsiders and Outperformers: Women in Fund Management,” by The New York Society of Securities Analysts (NYSSA), reports that “women managing assets are dramatically outperforming their benchmarks, most notably in down markets.” The article says women-owned hedge funds beat the average annual hedge fund return by a substantial margin, according to Hedge Fund Research (HFR). From January 2000 to May 2009, women-owned funds averaged 9.06% annually, dramatically outperforming the Hedge Fund Research (HFR) composite index, which averaged 5.82%. Not only that: the article says that during the miserable latter half of 2008, women-owned hedge funds dropped less than half as much as the average hedge fund did–9.61% compared with 19.03% for the HFR composite index.
Making a difference:
While women in fund management are still underrepresented, other women are stepping into some of the loftiest posts and broadly influencing wealth management, regulatory and legislative affairs. Mary Erdoes is CEO of Asset Management at JPMorgan; Sally Krawcheck is president of Global Wealth and Investment Management at Bank of America, running the bank’s Merrill Lynch wealth management business, with some 16,000 brokers. Maria Elena Lagomasino is CEO of GenSpring Family Offices, with $18.8 billion in assets under management (AUM), for 700 families. Deborah McWhinney is president, Personal Banking and Wealth Management, at Citi. And Doris Meister is president, New York Tri-State Region, for BNY Mellon Wealth Management.
And on the government side of the street, Congresswoman Nancy Pelosi (D-California), is Speaker of the House of Representatives. She shepherded financial reforms through the House, passing the Wall Street Reform and Consumer Protection Act of 2009 last December. As Speaker of the House, Pelosi is third in the line of succession to be President of the United States, after the Vice President.
Mary L. Schapiro is chairman of the SEC and is pushing hard for Wall Street reforms legislation that should benefit investors, including the fiduciary standard for all who provide advice to investors. Elizabeth Warren is not only the Leo Gottlieb Professor of Law at Harvard Law School, but also chair of the Congressional Oversight Panel for TARP–responsible for overseeing $700 billion in bailout funds. And Denise Voigt Crawford is the commissioner of Texas State Securities Board and president of the North American Securities Administrators Association (NASAA), a very strong voice for reforms benefiting investors.
The progress is evident and indisputable. While there are many contributing factors to reasons that the number of women who manage the assets may currently lag, if you take the long-term view, it is inevitable that there will at some point be parity in women’s participation in this field. For the good of investors, financial services and society as a whole it would behoove the financial industrial complex to institute many of the recommendations made in the “Women in Fund Management: A Road Map for Achieving Critical Mass – and Why it Matters“ research from the NCRW–and soon.