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Tuesday, December 20, 2016

Where Are the Female Fundsters?

Reported by Katy Golvala

A recent industry report found that the participation of women in the fund industry has remained stagnant since the financial crisis.

Laura Lutton
Director of manager research
In 2008, one in five funds globally was managed by a woman. By the end of 2015, this stat remained unchanged. In more established areas of the industry—both geographically and by fund type—female presence lags even more. By some measures, the number of opportunities for women has decreased in recent years.

"We expected to see progress, but instead we've seen deterioration," says Laura Lutton, director of manager research at Morningstar and co-author of the report, Fund Managers by Gender.

In the U.S., for example, female fund manager presence is even more dismal than the global average. Only 10 percent of fund managers are women, and this is down from 12 percent in 2008.

The study, which was covered by Fortune, Barron's, Bloomberg, and The Associated Press, has gained attention for providing data-driven insight into anecdotal evidence that women in the industry have been sharing for years.

AP's Stan Choe spoke with Ann Miletti, a portfolio manager at Well's Fargo, who manages several active funds, including the $1.7 billion Wells Fargo Opportunity Fund. Miletti acknowledges some factors that may dissuade women from entering the fund industry, including the grueling work and travel schedule. She also suspects it could be part of a self-fulfilling cycle, where women shy away from entering the space because they see so few women there already.

Miletti recalls a moment at a conference where a group of male executives entered the room and, mistaking her for a hotel employee, asked her if she was going to clear a nearby table. They quickly realized their mistake when Miletti took a seat at the table.

Still, there are some upsides to being the only woman in the room.

"I've always tried to think about it as: I'm the only female in the in the room, so if I meet this CEO or CFO again, they might actually remember me," Miletti tells AP.

Despite considerable attention paid to this issue by industry leaders, women still have trouble breaking into legacy areas of the fund world. In large financial centers, including Brazil, India, Germany and the U.S., the rate at which women manage funds is well below the global average.

From a product standpoint, women are more likely to manage passive funds as opposed to active funds across all asset classes. Additionally, women are managing funds-of-funds at an increasing rate. Combined, this suggests that "women are less likely to manage portfolios that center on individual security selection and more likely to allocate assets, select managers, or implement indexing strategies," the report concludes.

However, Lutton notes that there have been some improvements to women's place in the fund industry. For example, fund size is no longer heavily correlated with a fund manager's gender. In 2008, the likelihood that a woman managed the smallest fund in a Morningstar category was significantly higher than the likelihood that she managed the largest fund. In the most recent study results, that gender bias has almost disappeared.

This study pulls data of over 26,000 fund managers registered in 56 countries. The co-authors say that this is the largest data set that has ever been collected to gain a deeper understanding of women's progress in the industry. It serves as a follow-up to a smaller, three-country study that was performed in 2015.

Lutton and her team intend to continue digging into gender industry trends. Plans for follow-up studies include delving deeper into fund performance by gender, comparing the performance of funds run by men, women, and mixed gender teams.


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