How many women are managing your money?

by: Delphine Govender

Date: Apr 1, 2019

When considering the demographic factors such as gender and age in financial services and financial products, we almost always consider these descriptors in relation to the client and almost never in relation to the service provider.  It is not exactly clear why clients spend so little time considering the demographic composition of those who render their services – whether it be asset managers or advisers – and perhaps a homogenous client base perceives the existence of a homogenous service provider base and vice versa.  In reality, however, we know homogeneity is the very last term to describe investors’ financial needs; goals and circumstances and accordingly service providers too should reflect this variety especially in terms of gender.


There are very few women money managers

In South Africa, less than 10% of all fund managers are women (according to research conducted at WITS University by N. Archary published in 2016).  This number has remained flat for close to a decade.  Globally, at December 2015, 15% of portfolio managers were women (as per research by O. Wyman disclosed in “Women in Financial Services” published by Marsh & McLennan).  Granted, the representation of women in broader roles (COO, CEO, Marketing, Client Services, Distribution) in the asset management industry is higher than this number, however, the glaring gap is the lack of women in the driving seat as a decision-maker deciding what investment instrument to buy and sell, and when.


Not only are there few women portfolio managers, but additionally women have a smaller allocation of funds entrusted to them to manage.  The findings in the WITS study named earlier indicated that less than 6% of the total assets under management in the South African unit trust industry are being managed by female fund managers.


The state of play in terms of gender diversity in pure money management roles, whether in South Africa or globally, is clearly abysmally poor.  It is even more revealing for a country like South Africa, where a strong promotion of gender equality and representation has been both policy and practice – and this has evidently not filtered through to investment management.


Why is there so little gender diversity in money management?

The low prevalence of women in money management roles appears to be driven by both “top-down” and a “bottom-up” factors.


“Top down” refers to what I term environmental contributors – this is a manifestation of both conscious and unconscious biases.  These include:


  • Unfair deep seated misperceptions: Research conducted in the US as far back as 2000 (J. Oakley, Journal of Business Ethics) and 2015 (R. Aggarwal & N.M. Boyson, Review of Financial Ethics), and affirmed in SA in 2016, reveals that women are stereotypically portrayed as less competent and less capable money managers. This stereotype is perpetuated despite evidence to the contrary and appears to directly affect the willingness of clients to choose funds managed by women.  In investing, competence is expected to come in a package that is male and therefore the alternative is treated with unfounded scepticism.


  • Overvaluing innate male investor characteristics: The environment also appears to place disproportionately high value on the innate behaviour of men in their role as investors, emphasising characteristics such as overconfidence; unbridled risk-taking; fierce competition and a ruthless determination to win as being necessary traits in investing success.


  • The glass ceiling: Women in asset management wrestle with an old-boys clique, as put simply in a 2014 Financial Times study on “Women in Asset Management”. “White men hire white men” the study further elaborates and as awkward as that truth is to hear, it sums up the pervasive reality that women only get as far they do as they are outside the impenetrable “inner circle” and the real culture of sameness is perpetuated.


  • Outdated organisational practices: A lack of willingness to embrace flexible working arrangements; disinclination for male leaders to sponsor and mentor women and an insufficient respect for the multi-facetted roles women play in society, families and businesses make the never-ending balancing act of work and life virtually impossible to successfully navigate.  Ironically, due to the desire that more men have been recently exhibiting to be more active in family responsibilities, we have started to experience significantly greater acceptance of flexible work options.


“Bottom up” refers to factors intrinsic to women themselves.  In my opinion these include:


  • Lack of a pipeline: Insufficient women either join the investment industry and/or insufficient women stay in the industry.  Investing is an endeavour of time and remaining “in the game” is critical to earning trust and confidence.  Many women cite the environmental factors outlined above for contributing to why they eventually and prematurely opt out of the investment industry.  A case of it being “too hard”, not for the work required, but to navigate complexity and perceptions which abound.


  • Self-doubt: young girls and women don’t suffer from a lack of confidence per se, but they are not raised with a “winning at all costs” mentality. This can be perceived as having low investment conviction which in turn can cause women to doubt their potential impact.


Why clients and investors should seek out diversity in their money managers?

There is little to gain from initiating a debate on whether women are better money managers than men or vice versa.  Not only is this spurious and irrelevant, but it is also something that cannot be proven given the lack of sufficient data points (especially in terms of the number of funds run by women).  More germane to the discussion, is that women possess the propensity to bring a range of differences in many important facets of investing that would be for the critical benefit of client outcomes.


In the aftermath of the 2017 Steinhoff failure, there was a realisation that so many investment managers in South Africa had been effectively duped for many years.  One of the questions that has come up repeatedly in this regard was whether the homogeneity of the investor base together with the same homogeneity of company management and directors was a contributor to why investment managers were unnaturally accepting of management’s undertakings for many years, despite many flags.  There was a general agreeability because everyone was similar.


Diversification is widely understood and embraced as the cornerstone in portfolio management, yet when considering who is actually managing one’s money  – there is a remarkable lack of diversification.


Female and male fund managers are not identical in the way they perceive investing and this lack of similarity enhances client outcomes as opposed to detracting from them.  For example, women appear to have a lower propensity for risk of loss in managing their portfolios (borne out by women-managed funds sharply outperforming their male counterparts during the global financial crisis, by losing significantly less client capital); women tend to be less extreme or momentum (herd) in their views; they have less active trading styles; they are more focused on fundamental research and tend to be more predictable in their investing behaviour over time.  In uncovering investment ideas, women are also able to relate to a wider set of trends in companies which are targeting women as customers which ensures a wider universe of potential investment opportunities are considered.


Lack of women money managers is negative for clients, the industry and our country

Archary’s research (WITS, 2016) concluded empathically that there is “no significant performance difference between female fund managers and male fund managers, so when employing new fund managers, companies should not consider gender as a deteriorating factor.  The limited number of female managers and female managed funds in the democratic nation of South Africa should be a point of concern for government and labour.  It possibly needs to be a career opportunity that is better promoted, to include it in career choices being made by the young population of South Africa.  The inclusion of more females in the South African financial market could lead to increased stability during periods of economic crisis in particular”.


The working world of 2019 and beyond has no place for conscious bias to persist.  Women can and do bring a necessary and complementary skill set; personality characteristics and risk attitude to significantly enhance the available investment offering as money managers.  For the required change to occur, 3 elements are needed:

  1. Clients need to become more engaged in the positive differences a diverse money manager base can offer and insist on this inclusion in the very same way diversification is sought out in asset classes, geographic exposure and sectoral exposure.
  2. More women themselves need to join and stay in the industry – this will not only overcome and break down the self-fulfilling perceptions that have existed to date – but also expose a client base to the necessary diversity of thought so patently needed.
  3. Organisational cultural change is needed and leaders in asset management firms must lead by example whether it be adopting a no-tolerance approach for non-inclusive practices, linking incentive bonuses of seniors to diversity and inclusion (both in hiring and promotion) and incorporating a range of flexible work arrangements to suit the modern day investment professional.


About the Author


Delphine Govender

Chief Investment Officer, Perpetua Investment Managers


Delphine has over 21 years’ financial services experience of which the past 18 years have been spent directly in investment management. Delphine co-founded Perpetua in 2012 after having spent almost 11 years at Allan Gray Limited, where she held positions of Portfolio Manager and Executive Director. She is a qualified CA(SA) and CFA charterholder. Delphine is Perpetua’s Chief Investment Officer and accordingly has portfolio management responsibilities over all asset classes.