Hedge funds run by women perform no better than hedge funds run by men, according to a new academic study that contradicts previous research and an increasing body of evidence that women make better investors.
Rajesh Aggarwal and Nicole Boyson, researchers at the Northeastern University Boston, concluded that “all female managers perform no differently than all male-managed funds and have similar risk profiles”, after analysing the performance of all hedge funds launched between 1994-2013.
Strangely, those with a mixture of both male and female fund managers did worse than single-gender hedge funds, it says.
Previous studies have suggested otherwise. Hedge Fund Research said last year that since 2007 women-owned or run hedge funds have returned 57%, against an industry average of 37%, while an index from professional services firm Rothstein Kass created in 2013 said that female-run funds outperformed men for the last two years.
Over the longer term, however, there’s no difference between the genders at hedge funds, said the research. Perhaps there’s a good reason for this though – women are woefully under-represented in hedge funds and those that do work in the industry are indirectly discriminated against.
The industry is utterly dominated by men – to the extent that older hedge fund managers feel the pressure to maintain the ‘body of a warrior’ to compete with younger traders. Of the hedge funds launched since 1994, just 2.6% were run exclusively by a female fund manager. That’s 439 hedge funds with at least one woman running a fund, compared to 9,081 with male portfolio managers.
While there’s no evidence of an inherent difference in skill between male and female fund managers, only the “better performing female fund managers are able to survive. Those that do tend to have more trouble attracting assets, says the research, “possibly because investors do not view women as typical hedge fund managers”.
However, the analysis suggested that 21.5% of employees in hedge funds as a whole were female. However, more women worked in marketing roles than in portfolio management roles, it says.
“Coupled with their prevalence in marketing roles at hedge funds, and consistent with our discussions with a fund of funds manager, it may be the case that more women are interested in the relationship side of hedge funds than the investment side,” says the research.
In an interesting twist, the study also examined how female hedge fund managers were represented in the media. It found 102 articles on the subject – 47 mentioned how women outperform men, 36 were on the absence of women in the industry and 25 were talking about children, divorce, appearance or sexism.
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