Study shows women-led hedge funds outperforming their male peers

Woman leaderHedge funds led by women have outperformed their male counterparts by more than 700 basis points for the last

six years according to a study from US-based advisory firm Rothstein Kass.

The report, titled Women in Alternative Investments: A Marathon, Not A Sprint, found that the firm’s Women in Alternative Investments index of 82 female-owned funds made annual gains of 6% since 2007 which compares favourably to other established industry indices such as the S&P 500 and the HFRX global index which added 4.2% and lost 1.1% respectively during the same time period.

The financial crisis of 2008 was a pivotal moment in the fortunes of women-led funds. At the time of the crisis in late 2008, the WAI index was outperforming its industry benchmark by just over half a percentage but by 2009 this figure had quadrupled and has continued to grow since.

According to Meredith Jones, a director at Rothstein Kass, the study’s findings are a reflection of gender differences in managing portfolio risk. “Women simply perceive risk differently than men and tend to manage their portfolios accordingly. This results in less performance slippage, a diminished tendency to sell at the bottom, and a more consistent application of their strategies. Over time, these traits can create a meaningful and persistent performance differential.” 

The report also investigated the level of gender-bias in the industry and found that of the 440 senior women in the hedge fund market featured in the survey, only 15.5% said their firm was managed by a woman while nearly 40% reported that their firm had no women on their investment committees.

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