Study: Women, Minorities Make The Best Hedge Fund Managers

Feb 22 2011 | 11:23am ET

Women and minorities make up a tiny fraction of hedge fund managers, but they are among the best at what they do, according to a new report.

Hedge Fund Research said that hedge funds run primarily by women and minorities have bested by a wide margin industry averages, and did particularly well in 2008, when the average hedge fund was battered by the financial crisis. In that year, the HFRX Diversity Index, which includes hedge funds that are majority-owned by women or minorities, lost just 5.41%; the average hedge fund lost more than 20%.

But it isn't just during the bad times that the minorities are better than the majority: The Diversity Index has enjoyed an annualized return of 7.6% over the last three years and 9.1% over the last five, compared to a 2.04% annualized loss over three years and a 0.46% annualized gain over five for the HFRX Global Hedge Fund Index.

The HFRX Diversity Index is split roughly evenly between women- and minority-owned firms.

"Women make fewer mistakes because they tend not to trade things that they don't understand," Galtere founder Renee Haugerud told Financial News. "They have less of the very large catastrophic downside losses."

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    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…