Female hedge fund managers deliver better results, study shows

·3-min read
UK Hedge funds led by women performed slightly better than those led by men.  Photo: Getty
UK Hedge funds led by women performed slightly better than those led by men. Photo: Getty

UK hedge funds that are led by women perform slightly better than those led by men, which could be beneficial to the finance industry in the long term, a new study suggests.

Britain has the highest proportion of female leaders at hedge funds compared to the United Arab Emirates, Australia, Singapore and Switzerland, according to research from trading platform IG Prime.

While this is promising for the sector, women still only represent only 16.2% of all senior management positions in the country.

UK funds saw a marginal increase in performance, 0.39, after five years of female management. The study said this implies that long term it may be a somewhat beneficial decision from a financial perspective to hire women for senior positions.

UK hedge fund's performance. Image: IG Prime
UK hedge fund's performance. Image: IG Prime

Women use different strategies to men, and female fund managers are more inclined to use an equity-led investment strategy (60%.).

They are also more likely (65%) to diversify across markets, IG said, as they are very familiar with several markets compared to men who are likely to due to pressure from management (50%.).

The top 10 UK funds with the highest percentage of females in leadership. Image: IG Prime
The top 10 UK funds with the highest percentage of females in leadership. Image: IG Prime

In its analysis IG explores the impact of gender on hedge fund performance. However, while it found no consistent correlation between female leadership and either positive or negative fund performance, the report indicates women-led hedge funds reported improved performance.

The study has found that, within hedge funds, only 15% of the senior management team members are female across the world.

Switzerland came just behind the UK as the country with one of the highest proportions of women in leadership roles across all markets at 16.2%. But, the data shows that there was no "significant correlation" between the gender of leadership and the performance of the fund, and the one month metric showed a decline of 0.29 in fund performance.

Read more: Bumper pay growth in finance fuels earnings inequality in UK

In Australia, 14.8% of members were women overall across all senior fund management teams. IG notes that although the performance after one month of female leadership declined, the five year performance results are "mildly suggest" increased performance.

The UAE had the lowest proportion of female leadership along with Singapore, with just 7.7% of senior staff being women. UAE did however show the highest signs of correlation between female leadership and fund performance. In the 12 month and 3 year performance metrics there was a significantly positive impact on fund performance following female leadership. IG said these correlations were not, visible in the short term metrics, suggesting female leadership that surpasses three years led to advantages.

Singapore also presented a negative correlation between female leadership and performance with a decline of -0.17 after three years of female management.

The lack of women in top positions in the sector also seemed to correspond with less investment in female-led funds.

Katja Bergman, general partner and co-founder at BRIGHTLY Ventures noted that whilst her female team took more meetings than her male counterparts they got less investments.

"The investments we got from private institutional funds were a result of long relationships built over the years, previous track record and a large volume of meetings," she said.

Watch: Why do we still have a gender pay gap?

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