SMART INVESTOR: Women-Owned Hedge Funds Are Blowing Away The Competition
No matter how you slice and dice the numbers, there's little that hedge funds have going for them these days.
Last year was particularly brutal for the industry, which performed just 1.3 percent better than the S&P 500 and saw hundreds of offices shuttered as a result of poor returns.
But there were at least a small fraction of firms that had something to smile about –– those owned by women.
A new report by financial services firm Rothstein Kass shows female hedge fund managers netted an average 8.95 percent return in the third quarter of 2012, while the HFRX Global Hedge Fund Index (released by Hedge Fund Research) showed a 2.69 percent net return through September.
“Our report certainly displays the dichotomy facing women in the alternative investment industry,” said Kelly Easterling, principal-in-charge of Rothstein Kass’ Walnut Creek office. “We definitely see increased demand for women-owned and -managed funds from institutional investors, although the pace of investments is not as fast as many of the women we polled would hope."
As investors, women have time and again proven they have one weapon in particular that sets them apart from the opposite sex: patience.
“The fact that women-owned or managed hedge funds have been able to handily outperform their male counterparts is not particularly surprising,” said Meredith Jones, director at Rothstein Kass and author of the study. “There have been a number of studies that show women investors to be more risk adverse, and therefore potentially better able to escape market downturns and volatility. ”
And yet, there's still a glaring imbalance between female and male leadership roles in the investment business –– with fewer than 20 percent of C-level positions at hedge funds filled by women. Women are even scarcer at venture capital and private equity firms, where they make up 13 percent and 12 percent of C-level desks, according to the index.
The reason?
Rothstein asked 366 senior-level women in the alternative investment industry for their points of view, and nearly half admitted their gender made it "more difficult to succeed" in the business. More specifically, in an industry where reputation and track record weigh so heavily on moving up, there aren't enough open positions for women to get their feet in the door. And it doesn't help that not many women grow up dreaming about working in finance.
"While there are signs of increased interest in women-owned and -managed alternative investment funds, the pace of asset flows, combined with the historical lack of supply of women in the industry, has not yet kicked off a revolution," said Jones. Still, there has arguably never been a better time for women to take the reins.
"It seems as if the right ingredients are in place," she added. "Strong performance, generally positive investment outlook and emerging manager mandates ... there can be little doubt that women should become more commonplace in finance."
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