Barriers to Entry: Challenges Women Face in Fund Management

By: WE Staff

While women in fund management continue to face challenges related to underrepresentation and gender bias, there is a growing recognition of the importance of gender diversity in the financial sector. Efforts to promote equality and inclusivity in fund management can lead to improved investment outcomes and a more balanced and equitable industry.

The diverse section of finance and investment has traditionally been dominated by men, and despite significant advancements made in various industries towards gender equality, fund management is still a field in which women are disproportionately underrepresented. This disparity affects the diversity, effectiveness, and general health of the financial industry and is not just a matter of numbers but it also reflects a systemic problem that has persisted for decades.

Women continue to face barriers in the field of fund management despite their remarkable accomplishments achieved across a variety of professional fields and their rising participation in the workforce. This underrepresentation is a multifaceted problem caused by a complex interplay of cultural, institutional, and systemic factors.

Here are a few data or surveys that mention the percentage of female workforce in fund management sectors:

According to data, the fund management sector's gender ratios are comparatively low which has not even improved since last year.

Citywire, a financial publishing and information company has taken its annual survey titled Alpha Female Report which mentions that the previous year there were only 12 per cent female portfolio managers compared to this year, just 12.1 per cent female portfolio managers have been recorded.

The percentage of female portfolio managers has just shown an increase of 2 per cent since 2016 and in India, there are only 7 per cent of female portfolio managers at present.

According to Margaryta Kirakosian, editor of Citywire's Alpha Female Report 2023, the percentage of female portfolio managers is slower compared to last year which is becoming a major concern in the asset management sector.

The total number of new funds launched in the past year gradually decreased by 50 per cent whereas only 6.2 per cent of new funds have been launched during that time.

Margaryta further added that the opportunity to run new funds will be lessened for women as few of them will be introduced to the market. In the previous 12 months, only 274 new funds have been launched which is less compared to last year's 562 new funds.

The average number of female managers is 1,490 globally as opposed to 1,508 in the past year. When the average size of portfolios managed by Ken and women have been compared, the disparity is clear as men make twice as much money as women in the field of asset management.

In terms of gender parity among portfolio managers, Taiwan tops the list among other financial destinations. According to data, 31 per cent of Taiwanese mutual funds have at least one female portfolio manager and up to 29 per cent of the funds are monitored by females or all-female teams.

The proportion of Indian female managers ranks in the 19th position compared to the 24 countries that include more than 100 managers managing funds. Only 8 per cent of the funds managed in India have at least one female manager in the team whereas 1 per cent of the funds are managed completely by women.

Reasons to not Promote Women in Fund Management:

• Fund Managers claim that women lack experience in fund management.
• Firms provide fewer opportunities to test out new strategies.
• Even if new funds are launched with female portfolio managers, they will be based on specialized and niche strategies rather than core ones.

According to a study by Morningstar, as of 2020, Women represent only about 10 per cent of fund managers globally. There is a financial as well as social problem with the lack of gender diversity in the fund management industry. Diverse investment teams have been shown to perform better, according to research.

A number of obstacles, such as unconscious bias, a lack of mentorship opportunities, and limited networking opportunities, contribute to the underrepresentation of women in fund management sectors. The industry must value gender diversity and make concrete efforts to foster an inclusive workplace.