Somewhere in India right now, a woman is closing out a quarter where
the mutual fund she manages beat its benchmark. She did not take a big risk or
make a flashy move. She read the numbers carefully, made calm decisions when
calm decisions were needed, and won the way funds are actually supposed to be
won: quietly. Somewhere else, at almost the same time, a man does the same
thing, posts a similar number, and gets noticed for it. That difference, not in
the result but in who gets seen for it, is one of the more telling patterns in
modern finance.
This is not just a feeling. Researchers who track where money actually
goes have measured it directly. Investors pay less attention to funds run by
women than to funds run by men, and they react far more strongly to a man's
good month than to a woman's identical one. The gap has nothing to do with
performance. It has everything to do with who investors picture in the chair
before they even look at the numbers. And once you do look at the numbers, they
tell a very different story.
Start with the hard data, because it does not support the assumption.
A Goldman Sachs analysis of the market's recovery from the March 2020 crash
found that 48 percent of female-managed funds beat the market in the months
that followed, compared with just 37 percent of all-male-managed funds.
Research from Investment Metrics on global large-cap equity portfolios found
that in a tough year for markets, portfolios led or co-led by women lost far
less against their benchmarks than portfolios run entirely by men. A separate
study of 2,600 U.S. equity funds between 2008 and 2021 reached a blunter
conclusion: all-male teams were the weakest performers in the entire group. In
India, researchers studying local fund managers keep finding the same pattern,
a more careful, risk-aware style that produces steadier returns, with less
swagger and fewer wild swings.
That last point is the key to the whole story. The very trait people
read as caution, even timidity, in a female fund manager is the same trait that
saves her portfolio from the mistakes that keep tripping up her male peers.
Overconfidence is not just a personality quirk. It is a cost, and men pay it
more often. Studies on investor behavior have found that men trade more often
and more aggressively than women, and that this extra trading hurts returns
instead of helping them. One well-known study found that excess trading cost
men about 2.65 percentage points a year in lost returns, against 1.72 points
for women. Fund managers are not exempt from this just because they are
professionals. The market does not reward confidence for its own sake. It
rewards being right, and being right more often takes exactly the kind of
patience that keeps getting mistaken for a lack of ambition.
So why does almost nobody know this? Part of the answer is
representation. In India's mutual fund industry, women manage close to a fifth
of total assets, but they still make up only about one in ten individual fund
managers. The global picture is similar. In recent years, only around 13 to 14
percent of active manager portfolios worldwide had a woman as lead or co-lead,
a number that has barely moved in twenty years. In hedge funds specifically,
one industry veteran put the figure at roughly 7 percent. The higher you climb
in asset management, the fewer women you find, which means fewer women's names
come up in the rooms where reputations get built.
But representation is only the easier half of the answer. Researchers
at Yale and Columbia ran a study that exposed something harder to accept.
Investment professionals judged identical investment advice more harshly when a
woman's name was attached to it, even when the evaluators had every reason not
to discriminate and full access to the same performance data. The bias held up
even when the evidence was right in front of them. This is not a gap that
better information will close on its own. It is a gap in what people are
willing to believe once the information is already there.
Think about how a rational market would treat any other asset behaving
this way. If a stock kept quietly beating its sector while investors ignored it
out of habit, no analyst would call that a curiosity. They would call it a
mispricing and buy the stock before everyone else caught on. Women fund
managers are, by almost every piece of evidence available, exactly that kind of
mispricing: underpriced, overlooked, and beating the benchmark anyway, quarter
after quarter, largely unnoticed by the very industry whose job is to notice
performance.
The case for putting more women in the room where investment decisions get made does not need a new argument. The argument already exists. It is sitting quietly in the performance data, filed away in a fund that beat its benchmark again last quarter, waiting for someone to actually read it.
The writer is an assistant professor at Rishihood University, Sonipat, Haryana. The views written in article is solely her independent research views.
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