Hedge funds led by women have outperformed their male counterparts by more than 700 basis points for the lastsix 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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