Whatever progress women are making in the asset management industry, it is not yet showing up in the ranks of portfolio managers, where the percentage of women fund managers has been hovering around 14% for the past two decades.
Morningstar, which crunched the portfolio manager gender data in just about every way imaginable, showed that women fare slightly better when it comes to fixed income and passively managed index funds, but as a country, the United States continues to lag the global averages.
The review of the global universe of more than 25,000 fund managers across active, passive and asset allocation strategies for mutual funds and ETFs found that women made up a record 14.09% of all portfolio managers at the end of 2020, which is up from 13.76% at the end of 2000; the level has been as low as 13.23% at the end of 2015.
But in here in the United States, the world’s most advanced financial services economy, women represent just 11% of all portfolio managers, which is up from 10% at the end of 2015, but down from 14% 20 years ago.
The data are slightly brighter when viewed from the perspective of percentage of funds with at least one female manager.
From that perspective, 13% of all U.S. funds have at least one female PM, which has been slowly but steadily climbing from 2000 when it was at 6%.
When separated into active and passive funds, 14.7% of the index fund managers are women, compared to 14.1% of the managers of active funds.
The active manager percentage is up from 13.7% at the end of 2000, while the passive percentage is down from 15.8% 20 years ago.
The data, compiled by Amrutha Alladi, associate quantitative analyst at Morningstar, did not include investment performance comparisons when women are among the managers of a fund, but it did include the 2020 performance and rankings for the more than 170 funds managed exclusively by women.
Perhaps not surprising to anyone who has been paying attention to fund performance lately, Catherine Wood, founder and chief executive of ARK Investment Management, is well ahead of the pack in terms of performance among funds managed exclusively by women.
The $7.7 billion ARK Genomic Revolution ETF (ARKG) gained 180.5% last year, the $5.3 billion ARK Next Generation Internet ETF (ARKW) gained 157.1%, the $17.7 billion ARK Innovation ETF (ARKK) gained 152.5%, the $2 billion ARK Fintech Innovation ETF (ARKF) gained 108%, and the $1.7 billion ARK Autonomous Technology & Robotics ETF (ARKQ) was up 106.7% last year.
While Wood was the only manager on the list of female-only U.S. domiciled funds to produce triple-digit returns last year, there were several funds with returns of 50% or more, including the $732 million Alger Mid Cap Focus Fund (AFOZX), managed by Amy Zhang.
The last time Morningstar analyzed fund performance through the lens of manager gender in 2018, the research found “no significant performance difference between male and female fund managers, nor differences in fund performance for offerings run by mixed-gender teams. Therefore, we find that performance does not explain the lack of diversity in the fund industry.”
While the gender gap is real and significant among fund managers, a lack of evidence showing that one gender added significant alpha likely explains the general lack of interest among financial advisers in a portfolio manager’s gender.
“Thankfully, the gender of a fund manager has never seemed to be a factor for my clients,” said Ashley Gragtmans, financial adviser at Parsec Financial.
“However, gender has often come into play when I interview to be someone’s financial adviser,” Gragtmans said. “Recently, I have started to see a positive shift, where more clients are seeking out, or are not opposed to, a female adviser.”
Belle Osvath, a financial adviser at VLP Financial Advisors, agreed that “the gender of the portfolio manager is not a factor.”
But she added, “The fact that you are doing an article on this topic speaks volumes about how women are perceived in finance even to this day.”
Jodi Viaud, partner and financial adviser at Knox Grove Financial, said she is “never asked” by clients about the gender of portfolio managers.
“For my clients, they value the relationship they have with me, as their adviser,” she added. “When reviewing their investments and financial plan, I will make recommendations based on their needs and objectives. The gender of a portfolio manager has never been a discussion.”
While gender equality in general is a focus of at some of the largest fund companies, including Fidelity Investments and Vanguard Group, both of which acknowledged not specifically measuring the gender of fund managers.
According to a statement from Vanguard, “These figures are not available at this time. However, Vanguard is preparing data to be shared publicly.”
“Vanguard is committed to fostering a diverse work environment in investment management and more broadly across the enterprise,” the statement continued.
Vanguard also pointed out that Michelle Louie, Christine Franquin, Gemma Wright-Casparius and Jean Hynes combine to manage more than $1.1 trillion across four of Vanguard’s largest funds.
Fidelity spokeswoman Meghan French said in an emailed statement, “At Fidelity, we believe that building and sustaining a diverse and inclusive workforce is both the right thing to do and a business imperative. Our support of women is not a stand-alone initiative–we believe in the value women bring to every layer of financial services. While we are seeing some progress – with attrition among female associates declining and the percentage of female hires in 2020 was 40%, up 20% year-over-year – we recognize that we, and the industry, still have work to do. As such, intentional support must continue to be present in every aspect of our strategy to truly drive progress and opportunities for women. Whether it’s saving and investing to reach their financial goals, starting a new job, or interacting with us through our network of 13,000 independent advisory firms, Fidelity is strategic in our efforts to serve women and those who identify as women.”
As the world in general, and financial services in particular, continue to understand and embrace the benefits of diversity, the focus on portfolio manager gender is not expected to go away anytime soon.
“Given the challenges actively managed equity funds have had for the past decade keeping up with better performing index-based strategies, resulting in market share losses to ETFs, asset managers should look to leverage a diverse talent pool and give more women the reins to co-manage or run their own funds,” said Todd Rosenbluth, director of mutual fund and ETF research at CFRA.
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