On International Women’s Day in early March, many financial groups dedicated sections of their websites to female employees and championed gender diversity.
Recent research by Refinitiv would suggest the industry is scoring high on gender equality, putting almost 50% of employees in banking and investment services as female.
“Banking and investment services appear in the top industries ranked by female employees and female managers,” the research group states.
Among managers in the finance industry, 36% are female, and among board members, 19.2% are women, as are 16% of executives.
This all looks positive, but even with the large number of women working in the sector, how many asset management groups actually employ female fund managers? Expert Investor decided to find out.
Weak female representation
About 14% of 329 European equity funds (from 156 different asset managers) have at least one female fund manager, according to Morningstar data. These funds are domiciled in Luxembourg and Ireland and have at least a three-year track record.
Despite the sector showing more gender diversity compared with other industries, the data illustrates that in funds management women are not often appointed to decision-making roles.
When the data is broken down further, the most common gender ratio of funds with at least one female manager is 50%. One-woman teams make up 15% of funds with women, while 2% of funds have two women in a team out of three.
A further 16% of funds have women as a minority in the team. One fund – Brandes European Value I – has four male managers and one female manager.
Breaking down the boys’ club
DNCA Finance head of responsible investment Léa Dunand Chatellet says that even a decade ago, less than 10% of people working in the asset management industry were female.
She now estimates that women make up about one-third of the workforce but notes that many of these women are in analyst roles.
“There are only a few women who are portfolio managers or making decisions at management level and even less are chief investment officers,” she says.
“There is definitely a positive upward trend of more women in asset management but most of them are in junior positions.”
The investment industry was for a long time viewed as “man’s business” and that senior management at firms asset managers were invested in were usually men too, Dunand Chatellet says.
“For the past 30 years it has been men debating with men. The decision-making has been with the lead portfolio managers – who were usually men. You might have seen a woman in an analyst or co-manager position, but I think men wanted to keep the decision-making for themselves.
“[However,] a lot of women are now studying finance and corporate finance and make up almost 50% of the industry, so there is no reason to not see more women in decision-making roles.”
According to Bankia Fondos director of fund of fund investments Alvaro Sauto, the gender split in asset management has improved markedly in recent years.
“We see more females in product specialist and fund manager roles, and while there is still room for improvement, it is changing fast,” he says.
Sauto adds that he does not think affirmative action measures to redress the gender imbalance are necessary. “The improvement is a consequence of women with very good backgrounds getting involved more deeply in labour markets. We have definitely seen more women attending our meetings.”
It is vital that senior management across the industry encourage women to take on more responsibilities, Sauto says.
He adds that the asset management arm of Bankia Fondos has been trying to increase diversity among employees. “I am hiring at the moment, and one of my focuses is to try and improve diversity because it can improve overall profitability.”
Diverse teams perform better
In terms of fund performance, 20% of the top 10 best-performing European equity funds have a female fund manager, according to Morningstar. The bottom 10 funds have no female managers.
The data suggests funds could improve performance by increasing the team’s gender diversity.
According to Morningstar, the best-performing European equity fund over three years to 28 February 2019 is Lupus Alpha Micro Champions, at 65.3%.
This is followed by Comgest Growth European Smaller Companies (47.1%), Acadian European Equity Ucits (37.4%), Schroder International Selection Fund European Alpha Focus C (37.3%) and Manavest Europe Evolution Equity (36.9%).
The Comgest fund has the most diverse team with three female and one male fund managers.
While only one out of the top five funds (20%) has female managers, there are no female managers for funds that performed the worst.
The worst-performing fund over the same time frame is Aberdeen Standard Investments European Equity Unconstrained D, at a loss of 2.3%.
This is followed by Odey Pan European R, with a loss of 2.1%, Raiffeisen Fonds EuroAC (-2%), Vitruvius European Equity B (-1.7%), and Haspa Substanz (-1.5%).
Looking at the three Aberdeen Standard Life European equity funds within the list of 329 – Aberdeen Global European Equity A, European Equities Fund and the European Equity Unconstrained D – the best-performing fund is Aberdeen Global European Equity A, at 26.1%.
This is also the only fund out of the three that has a female manager (out of a team of three). The other two poorer-performers are run by one-man fund manager teams.
The European Equities Fund returned 13% and the European Equity Unconstrained D was down by 2.3%.
Do fund selectors care?
Tanja Wennonen-Kärnä, a senior portfolio manager at Evli Bank, says management team diversity is not a primary criterion; the priority is always performance.
“Ultimately, performance is what we target, and if a diverse team performs better, then that’s the preferred choice,” she says.
However, according to Wennonen-Kärnä, the more diverse teams typically perform better overall as they take more perspectives into account.
She believes the industry should not set specific targets for the number of females in particular roles but that there should be a natural progression towards a more even gender split.
“Greater diversity will come naturally the more we highlight the issue, but the topic currently does not come up enough,” she says.
Sauto says a more even split among the genders could still be five to 10 years away. “The industry is going in the right direction and the evidence shows it provides better final profit and loss outcomes. The outcomes are better when you mix the genders and also cultures.”
Dunand Chatellet shares the view that industry targets to boost diversity could lead to unqualified women being promoted to senior positions. It’s better, she says, that women get to the top on merit alone.
“Women have to be confident to aim for the top, even if they have only been in an investment team for a few years,” she says.
“Women should not be fearful about sharing ideas, even if they’re sometimes wrong. The only way to convince people around the table you are capable is if you speak up. But if you feel you can’t speak up because you’re a woman then you won’t gain the recognition.”
The industry has reached a tipping point, according to Dunand Chatellet, and many firms now want to promote women into senior positions.
“There is a much greater understanding now that the way women behave, ask questions and invest is different to men, and that actually helps to diversify risk.”
In terms of asset managers, Amundi Asset Management had the highest percentage of funds with at least one female fund manager among the managers that had more than two funds in the Morningstar sample.
Six out of 13 (46%) Amundi funds had at least one female manager, followed by DWS that had two out of five (40%), BNP Paribas had four out of 11 (36%), and Comgest one out of three (33%).
According to Amundi’s 2017 corporate social responsibility report, the gender split within the firm was 41.5% female and 58.5% male.
When it came to managers, 42.2% were female and 57.8% were male. While this is a fairly even representation of both genders, when non-managers were assessed 74.4% were female and only 25.6% were male.
Amundi, BNP Paribas, and Comgest were unable to comment on gender diversity when Expert Investor contacted them.
Another manager MFS Investment Management had four European equity funds, out of the data set, had one fund (MFS Meridian European Research A1) run by one female fund manager, another fund (MFS Meridian European Equity A1) run by one female and two male fund managers.
However, its MFS Meridian Blended Research Europe Equity 1 fund was run by four male managers, and its MFS Meridian European Core Eq A1 EUR run by one male manager.
At the time of writing, the MFS website frontpage promoted International Women’s Day with a video championing the firm’s former head of fixed income, Joan Batchelder.
The video said: “Through time, women have changed the world by being unafraid to be who they are. That’s what former MFS, head of fixed income, Joan Batchelder did at a time and in an industry where women’s voices had yet to grow strong”.
The firm’s chief executive, Mike Roberge, said in the video: “She trained and mentored all of the future leaders of the firm including myself. And I strongly believe that if Joan Batchelder had not been at MFS, we would not exist today”.
Despite this praise and commotion surrounding the great women of the firm, only seven out of 48* (14.6%) equity portfolio managers were female. This figure was also directly in line with the European equity fund manager gender split of 14%.
MFS Investment Management did not respond to Expert Investor’s request for a comment about the company’s gender diversity.
However, as the data shows, this example is not an anomaly and many asset managers are following the same pattern.
There is a disconnect with the lack of enthusiasm from asset managers to speak about their gender diversity – even from firms that were doing relatively well in this space – and the scarcity of female fund managers, despite many of these firms promoting themselves as pioneers in tackling the gender gap.
*Update: since the time of writing MFS now has eight out of 49 (16%) equity portfolio managers who are female.