The number of women working across the asset management and institutional investment industry has increased in recent years, according to the findings of a number of studies. However, there is a persistent problem with representation in executive roles.
A recent study from Global SWF shows that only one in ten CEOs of a state-owned investor is a woman. The proportion gets worse for chief investment officers, where only one in 20 is female. It gets marginally better for executive roles more broadly, where the share of women increases to three in ten.
This, however, is the real issue. While women have been getting more representation in boards, they are still predominantly shut out of executive rooms.
The picture is reflected in the asset management industry. Consultancy Heidrick & Struggles has looked at the composition of executive teams, boards and regional teams of the top 50 firms ranked in Willis Towers Watson’s top 500 asset managers index and found that 20% of leaders are women and one-third of them have a board seat rather than a senior executive position.
The Citywire Alpha Female Report 2021, which looks at the composition and performance of fund management teams, has found that only 11.8% of the 16,353 managers on its database are female.
Inclusion matters more than numbers
Even if they are not concerned about gender equality in principle – although nobody would ever admit to it in public – senior managers would be well advised to look at this topic as a way to boost performance.
Citywire’s analysis shows that gender-mixed teams get higher returns. “Over the past three years, if we look at how much total return is generated per unit of risk, the mixed teams come out on top,” the study says. “For every unit of risk a mixed team takes, 1.82% in returns is generated, which compares with 1.78% for male-only teams and 1.68% for female-only teams.
“In comparison, solo male managers return just 1.4% per unit of risk and solo female managers return 1.43%. The numbers show that teams work best.”
Fostering a team-oriented rather than a star manager environment is the key to gender inclusion, according to Stephanie Niven, portfolio manager at asset manager Ninety One. “What matters is not gender diversity per se but inclusion,” she says. “Starting at the bottom and nurturing non-dominant groups is a fantastic way to grow.”
Niven, who is heavily involved in Ninety One’s graduate recruitment programme, says that as well as getting enough women into the company, it is crucial not to lose them along the way. “A culture change is required, and it is very hard to do that in an industry that values tenure,” she adds.
Things, however, are beginning to change, according to Niven, as investors and managers alike are finally having a conversation about shifting their focus away from track record and star performance as forms of appraisal.
“This new approach creates an opportunity for women to play a bigger role as the focus moves to creating value for all stakeholders,” she says.
Leading by example and finding the right balance
Numbers count, however, if applied to the right context. A company that has strong female executive leadership is more likely to attract female candidates and even more likely to nurture them throughout their career.
Nearly half (43%) of real assets investor Pantheon Ventures’ leadership team is female. Partner and head of global infrastructure and real assets team Andrea Echberg says that when she started out at the company nearly ten years ago there were only four people in the investment team. Now they are 27, a 50/50 proportion with men.
“We have not achieved this through quotas or by design,” she says. “We have simply been choosing the right candidates. A firm will naturally attract diversity if applicants see role models within the team that make them feel like there is not a glass ceiling to break.”
When Echberg started her career as a project engineer in the 1990s, it was still unusual for a woman to work in the sector. After moving on to more commercial roles in the investment banking world, having fought for equal pay – and only obtaining a rebalancing – and setting up her own consultancy after having had a child, Echberg landed at Pantheon in 2012, where she finally found a more balanced work-life environment.
The change of culture within the investment world is a reflection of a broader change that has been happening in society.
“The numbers of women in the industry have been improving in recent years and it is now going hand in hand with the change of women’s role at home too,” says Deborah Zurkow, global head of investments at Allianz Global Investors (AllianzGI).
“There are men in their 30s who want to be home with their kids now, and even the unconscious bias that women used to have about their own role in the family is gradually disappearing in new generations,” she adds. “There is less of an assumption about who should do what at home versus at work.”
Diversity, however, is not about getting a seat at the table. It is about getting a voice at the table, Zurkow warns. As well as learning to speak up more in meetings, women also need to find the right balance for themselves.
“My kids would tell you that their father was their main caretaker during the week and I am OK with that,” she says. “My husband was comfortable being the one who stayed home as his career was less demanding. Some women sort the problem out by moving closer to their parents; others by spending more on childcare.”
The ESG factor
Broader consideration for environmental, social and governance (ESG) parameters in the investment decision process is also playing in favour of female inclusion and their representation in executive teams.
“A company’s level of inclusion is one of the parameters in our investment due diligence process, and not only ours, also of the institutional investors that we act on behalf of,” says Pantheon’s Echberg.
AllianzGI’s Zurkow agrees that the increasing importance of meeting ESG goals has a very important role in achieving gender equity across the investment industry.
“I expect to see the number of women in senior positions rise significantly over the next five years,” she says. “It will become increasingly hard for asset managers to get investor interest if they have very low numbers of women in their organisations.”
No matter how many labels the industry uses – gender equality, equity or even just inclusion – this remains a multifaceted issue and as such requires a concerted effort to be resolved.
“This is an issue for many stakeholders.” says Ninety One’s Niven. “We need clients, consultants, companies, small investment teams to think about it. Sustainability comes from this. It is about short-term versus long-term thinking.”