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Hedge funds managers : Are women better than men?

In recent months, two studies leading to the same conclusions, set tongues wagging in the hedge fund industry : women hedge fund managers perform better than their male counterparts...

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In the last few months, two studies have set tongues wagging in the London hedge funds industry, which represents 80% of the whole industry in Europe. Two studies reached the same conclusions : women hedge fund managers perform better than men.

The first survey delivered by the Hedge Fund Research, indicates that alternative funds, under the care of women, have delivered an average annual return of 9,06% over ten years. Almost twice as much as the funds managed by men (5.28%).

Another study carried out by a hedge fund review, indicates that in 2008, at the height of the financial crisis, hedge funds controlled by women saw their performance drop at half the rate of those of funds managed by men (9.6% against 19%).

Caroline Hoare, the director of GLC, which is one of the most established funds in London commented " I think that these studies considered only small samples in the industry, or that they did not completely represent reality. I think that these studies are aimed at making good headlines for newspapers," she smiled. "Having said that, I do think that the financial crisis could have been avoided if Lehman Brothers had been Lehman Sisters"

Caroline Hoare, fifty, joined GLC in 2001 when the fund had only 100 million pounds under management and a single strategy. Since then the portfolio has increased twenty fold and GLC now operates 5 strategies. The Hedge Fund Journal has just classified the top 50 top most powerful women in the hedge fund industry. "I was immediately fascinated by this environment," said this lawyer by training. "Certainly it is essentially a man’s world, but to be honest, I have never really considered the difference between male and female. It is true that men are more likely to take risks and are less concerned than women by the consequences of risk. They don’t really ask questions. It would be beneficial for the whole financial industry to rely more on women, but the problem is that there are not enough competent women candidates out there."

The environment is not exactly welcoming. The hedge funds sector relies even less on women than trading and business banking sectors. And, in addition, appearance, in particular, dress code, plays a very crucial role. More specifically, women cannot dress exactly the same as men, nor exactly like women. Their status is not really recognised.

It does not, however, prevent the hedge fund industry from drawing on qualities such as innovation and flexibility where women often show more ease. The hierarchy is a lot more diffuse, malleable and progressive than in other spheres of financial services, an advantage, certainly in the case of motherhood.

For Thomas Cooley, a professor at the University of New York, " a large number of books have been written on the way in which women have to adapt to a man’s world. But in reality, I think that in this environment, it is really up to the men to adapt to the women (...) Instead of women having to behave like men, I think we need men to understand that women do not necessarily have to behave like them, particularly at work."

A few weeks ago, the director of institutional sales at HSBC, Barbara Rupf Bee explained to Next Finance that the real answer lies in the individual and not in the gender itself. Obviously there are huge differences in the way that men and women, as individuals, work, but here again, I do not attribute that to gender; it is linked more to life experience, knowledge and the individual’s expertise"

Lucy Kellaway, former member of the Board of Directors of Admiral Group was astounded a few months ago that one could come up with a ratio of "assets / estrogen". "It is a repulsive, and discriminatory attitude towards women who have reached the stage of menopause. It is devoid of all sense."

Another study recently led by Daniel Ferreira, professor at the London School of Economics, indicated that companies in the FTSE, where there were a larger number of women board members, had inferior performance to those led exclusively by men. Ferriera explained that too much good governance in a business could have harmful results on risk taking and profits.

Perhaps women will really come into their own in the financial industry when broader criteria other than profits are accorded more importance.

Johann Harscoët , June 2010

Article also available in : English EN | français FR

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