Women are more likely to be at the helm of a passively managed fund or a fund of funds than an actively managed one, a new Morningstar study found. They are also more likely to be on a team-managed fund than serving as a solo manager.
Women with more credentials than men are also underrepresented in the industry, Morningstar says. "We knew the numbers were low, but we didn't know they were that low," said Laura Pavlenko Lutton, co-author of the Morningtar study. It's more likely that women fund managers hold the CFA designation than men, for example. And a 2014 study showed that men are more likely to brag about their investment performance, while women are more likely to underestimate it.
One theory for the disparity is that passively managed funds and funds of funds, such as asset allocation funds, are a rapidly growing sector of the fund industry. Running an actively managed fund solo is considered, for many, the pinnacle of a long career
, and it may be easier to get to run a new fund than to take over an existing one.
The other answer could simply be that Wall Street remains a male-dominated industry. Women run just 2% of hedge funds, for example, even though women-run hedge funds show a “significantly higher presence in the top quartile of performance in the past decade,” according to a study by Kyria Capital Management. A 2001 paper by Terrance Odean and Brad M. Barber at the University of California at Davis suggested that men tend to be overconfident, which leads to overtrading and lower returns.
"This is a demanding career, and it may be that there are some women who just aren't interestred in the industry," said Ms. Lutton. "Whether that's a cultural issue about the 'boy's club', we don't know."
The fund industry isn't without star female managers. Gemma Wright-Casparius, for example, runs the $7.8 billion Vanguard Short-Term Treasury Fund Investor Shares (VFISX), and Ramona Persaud runs the $7.2 billion Fidelity Dividend Growth (FDFGX). A few women have managed to get to the top of their fund companies: Abigail Johnson, for example, is now running Fidelity, and Mellody Hobson is president of Ariel Investments.
Large fund companies are more likely to have women managers than small ones, the Morningstar study said. Even so, “The broad trends hold true: Women are underrepresented in fund-management ranks globally,” the paper, written by Madison Sargis and Laura Pavlenko Lutton, concludes.