Wednesday, 4 May 2016
Last updated 12 min ago
Jan 15 2014 | 10:29am ET
The data are in and the puzzle persists: while women continue to outperform their male counterparts in the hedge fund industry, investors have no plans to allocate more to women-owned or managed funds.
For Women in Alternative Investments: A Marathon, Not a Sprint, its third annual report on the performance, prospects and outlook for women in the alternative investment industry, Rothstein Kass polled 440 senior women, including managers, investors and service providers.
The report found that for the six-and-a-half years ending June 2013, the Rothstein Kass Women in Alternative Investments Hedge Fund Index returned 6%, while the S&P 500 gained 4.2% and the HFRX Global Hedge Fund Index dropped -1.1%.
Although performance comparisons are more difficult in the private equity space, a small sample of women-owned or managed private equity funds reported net returns of 14.8% in 2012, topping the Cambridge Associates private equity fund index number of 13.8%.
“Women simply perceive risk differently than men and tend to manage their portfolios accordingly,” said Meredith Jones, director at Rothstein Kass, in statement. “This results in less performance slippage, a diminished tendency to sell at the bottom, and a more consistent application of their strategies. Over time, these traits can create a meaningful and persistent performance differential."
But despite this evidence, the report found a whopping 73.5 % of investors expect their allocations to women-owned or managed funds to stay the same in 2014, 24.5 % expect them to increase somewhat and 2.0% expect them to increase significantly. Roughly 93% of investors stated they had no specified mandate to invest in women-owned or managed funds.
“In the investment management industry, demand is almost always one of the key drivers of supply, and at the moment, investors and women-owned and managed funds are faced with an interesting ‘chicken or the egg’ dilemma when it comes female-led funds," said Kelly Easterling, principal-in-charge of Rothstein Kass’ Walnut Creek office, in a statement.
"The lack of women-owned and managed funds almost precludes large-scale investments, particularly by institutional investors. On the other hand, until there is more money flowing to women-owned and managed funds, it is unlikely that there will be a huge influx of new fund launches.”
On the bright side, more women are planning to launch their own funds—17.5% of respondents this year compared to 14.2% in last year's report, which may help address the supply issue.
And more than half of those polled (59.7% ) believe there will be more women in the alternative investment industry in 2014 and beyond in prior years. In addition, the percentage of respondents who agreed or strongly agreed that their gender makes it harder to succeed in the alternative investment industry decreased slightly to 61.3% from roughly two-thirds in prior years.
The study also found that women more commonly occupy operational, financial or compliance roles within the alternative investment industry. In fact, the survey revealed that females hold the highest percentage of C-level jobs within the financial suite, at 39.7%; followed closely by C-level compliance and C-level operations positions, at 38.1% and 34.3%, respectively. Respondents indicated that CIO and CEO positions are held by women at 22.5% and 17.2% of the firms polled, respectively.
"At the end of the day, we believe this consistent outperformance will drive performance-hungry investors to increasingly allocate to women-owned and managed funds, spurring more launches as well as hiring trends in the industry," said Jones. "The only real question is the timing of this trend. Based on our survey results, real progress has already taken longer than most women expected.”