Reap rewards with female fund stars
Why backing women could make savers more money
WOMEN are slowly but surely making their presence known in the business world.
Ahead of International Women’s Day tomorrow, the FTSE 100 welcomed its sixth female chief executive this week as Milena Mondini de Focatiis was named new boss of insurance group Admiral.
On the FTSE 350, women make up nearly a third of board members at 31.9pc, according to figures from the Hampton-Alexander Review, which was set up to increase female representation at director level.
But in the fund management industry, which is all-too- often driven by unfettered male ego, women are rare. However given the downfall of Neil Woodford, who epitomised the cult of the macho investor taking risky bets, is it time for a female fund manager?
Despite the publicity around the likes of Dame Helena Morrissey, Nichola Pease and earlier, Nicola Horlick, only 105 of the UK’s 1,496 open- ended funds are run by women. In the profession as a whole, only around 11pc of staff are female.
That might explain why fewer women than men are engaged with their savings and investments. Almost a quarter of highnet worth women recently surveyed by Canaccord Genuity Wealth Management have no investment portfolio, while the same percentage (24pc) have no pension. The figures for wealthy men are 14pc and 18pc.
Yet in a study of 2,800 British amateur investors conducted by
Warwick Business School, women outperformed both the FTSE 100 and the men – because they tended to avoid speculative stocks and traded less frequently.
Separate research by Hargreaves Lansdown suggested a women’s investment portfolio would be worth 25pc more than the men’s over 30 years. Ann Cairns, global co- chairman of the 30pc Club, which campaigns for gender diversity in business, believes that encouraging more women into fund management is a no-brainer.
Another 2018 Morningstar study showed that women-managed funds performed better long term. Mixed-gender teams managing fixed-income funds performed better than male managers, but this position was reversed for equity funds.
Cairns says: ‘The performance of diverse fund management teams speaks for itself. Fundamentally different individuals – in this instance, men and women – approach money and risk in different ways, which can benefit different strategies and asset classes.
‘ The industry needs more women, it’s good for business.’
Cairns points out that in many households, women manage family finances. ‘Women are good risk managers – they weigh up everything they do, from the smallest purchase to largest investment.
‘They shop around more than men. That’s why we should encourage women to consider fund management as a career.’
For savers, picking a female manager is one way to diversify and access a different way of thinking. Canaccord’s research also indicated that women tend to be more concerned about investing in ‘responsible’ companies with reputations for being eco friendly and socially aware.
Some female fund managers focus on this. Kirsteen Morrison manages the Impax Global Opportunities Fund, along with David Winborne. She says: ‘ A diverse, gender-balanced workforce and inclusive culture enhances creativity, problem-solving and the quality of risk management and decision-making.’ In five years, her fund has grown investors’ money by 88.8pc when the sector average is 60.6pc.
There are also a number of female- managed investment trusts, whose shares can be traded on the stock exchange.
The Herald Investment Trust, managed by Katie Potts at Herald Investment Management since its inception in 1994, has doubled investors’ money over five years. Anyone who put £1,000 in at launch would now have £15,797.
Arlene Ewing, investment manager at wealth firm Brewin Dolphin, explains that the trust invests in strong but often unrecognised companies. ‘ It’s an approach that has seen the trust consistently deliver positive returns for more than 25 years.’
Focusing on the UK, Abby Glennie is investment director of Standard Life Aberdeen Smaller Companies Income Trust. After becoming the sole fund manager in 2018, she repositioned its portfolio to include companies with high-growth prospects, as well as those which are undervalued by the market.
Over five years, it has delivered growth of 83pc. Ewing frames improving diversity as an ‘ important challenge’ for the industry but believes progress is being made.
If the research on women’s investing prowess holds true, demand for more female-managed funds should certainly be there. It won’t just be the female managers who benefit – savers will reap the rewards too.