The push toward greater transparency on gender pay gap ratios, both in the U.K. and around the world, builds on two larger secular trends that are rapidly redefining the asset management industry.
From our nearly two decades of experience recruiting for asset management companies, we know that women tend to be underrepresented in the asset management industry — not because of an inherit bias on the part of employers, but because many women choose to go into other industries.
Research from Morningstar Inc. revealed that just 7% of investment managers in 2015 were female, down from 10% in 2009. Only 1 in 5 funds globally has a female portfolio manager, whereas in the U.K. the number is fewer than 1 in 10 funds. Statistically, women are much more likely to become doctors, lawyers or accountants than investment managers.
But change is at hand. Already, we are seeing more women graduate college than men. More women are studying mathematics and engineering — two fields of increasing importance in the asset management business — as well as business and finance. For the first time in almost a millennium, Oxford University — a significant talent pipeline for the asset management industry — last year admitted more female students than males. In time, this should result in a much stronger talent pool of female candidates.
Asset management firms also are taking steps to attract and develop more female talent. In 2016, a group of financial services firms launched the Diversity Project, a five-year U.K. campaign to promote employee diversity that is today backed by many of Europe's largest asset managers including:
- Aberdeen Standard Life;
- Allianz Global Investors;
- Aviva Investors;
- Columbia Threadneedle;
- Fidelity International;
- HSBC Global Asset Management;
- Legal & General Investment Management;
- Schroders; and
- Wellington Management.
These efforts are a step in the right direction. As more women pursue careers in investment management, the more they will rise through the ranks and adopt senior positions.
Another factor that plays to the advantage of female candidates is what we call "gender alpha." There is a growing body of evidence that asset managers with a higher representation of women, and particularly women in senior roles, tend to perform better.
Morningstar found that having one or more women on a fund's management team improved the odds that a new fund's launch would attract enough assets to be successful. Research from Morningstar also showed that while the performance of exclusively women-run funds rivals that of men-run funds, mixed-gender investment teams provided the best results. Within the hedge fund industry, a KPMG study in 2015 found that women-owned and women-managed hedge funds have outperformed both the HFRI and HFRX composites of hedge fund performance nearly every year since 2007.
Intuitively, this makes sense. Investors are naturally prone to groupthink, and the best way to ensure there is a diversity of opinions is to have a diverse portfolio management team. By adding women to the room, asset managers will be better able to spot investment opportunities and identify potential sources of risk.