Why are women still underrepresented in portfolio management?

Wednesday 12 January 2022

gender parity

Author: Maha Khan Phillips

Last year’s figures on female representation in portfolio management suggest the needle has not moved. There is a wider conversation to be had about Diversity, Equality, and Inclusion, says Maha Khan Phillips.

Whatever way you slice it, data on the representation of female portfolio managers in asset management shows there is a lot more to be done to increase inclusion. UK figures on fund managers by gender from Morningstar reveal that in the year to end September 2000, women made up 14% of portfolio managers. 21 years later, that figure stands at 11.2%ElsewhereCitywire’s Alpha Female Report 2021 suggests that numbers are rising, but from a lower vantage point. Since the report was first published in 2016, the overall percentage of individual female fund managers worldwide has risen from 10.3% to 11.8%.

The numbers show that we still have a long way to go. But given the growth of Diversity, Equality, and Inclusion (DEI) initiatives being run by asset managers, and the commitment and desire by many industry leaders to address the issue, the question becomes why the figures haven’t risen more substantially

The answer is complex and nuanced. Women are much better represented across other parts of fund management, for example. Ric van Weelden, Senior Partner at INDEFI, who has been researching and writing about gender diversity for the last few years, and is now involved in investigating whether The Diversity Project can launch a European chapter, highlights the fact that women’s general representation in communications and marketing, HR, sales and client services fares better. Once you strip those out, however, ‘…it becomes a rarefied ground where women hardly feature. It’s a combination of unconscious bias, and the fact that we haven’t been rewired enough to think of women in front office roles,” he says. 

He also points out that asset management itself has changed. “There are fewer graduates with modern languages, history, or liberal arts backgrounds, and more graduates focused on economics, finance, and mathematics. If you look at the representation of women in these types of disciplines, it is relatively low,” he suggests.

Job functions are shifting as well. “Five years ago we would have been doing a lot of hiring across investment, particularly for multi-asset portfolios and strategies. This has dropped a huge amount, the work we are doing is less for portfolio managers and more for leadership roles, for example a head of credit or a chief investment officer position, where there’s a need to look at efficiencies within the investment teams or products,” says Emma Penny, Principal at Heidrick & Struggles, the international executive search firm, and Vice Chair of CFA UK’s Inclusion and Diversity Network.

Penny points out that demand for talent in traditional asset classes is shifting as well. “We have seen asset management go through a huge amount of change, which was probably fast forwarded over the pandemic. There is huge demand outside of traditional asset classes, and more within private markets. Any portfolio management or investment leadership role we are looking at probably involves an element of private markets,” she says.

In November, Schroders Chief Executive Peter Harrison spoke at the ALFI conference in London, and said that traditional portfolio managers were losing value to technology and other specialists, with a ‘wall’ of new entrants with private assets willing to democratise them, potentially signaling the end of the mutual fund.

Widening the discussion:

Do conversations about gender parity in portfolio management need to be part of a wider discussion on inclusionFor many DEI advocates and practitioners, it is a critical point.

“What I hear from people working in the wider space is the immense frustration that we are still stuck on gender. The issue for women of colour in particular is that so often gender is perceived as being about white women. We need to take a more holistic view to make the workplace more inclusive for everybody,” says Sarah Maynard, ASIP, Global Head, External DEI at CFA Institute.

In September, CFA Institute released the findings of its Experimental Partners Program, an international project that convened 41 investment organisations to test the efficacy of DEI practices in the investment industry. The programme asked participating organisation to select, action, and report on three DEI ideas to determine best practice, and shows that some progress is being made. For example, results reveal a major shift in the industry, with the ownership of DEI moving from the HR team to business leaders more broadly, with an increasing number of expert DEI practioners advising on strategy. 

“The transition of DEI leadership from HR to business leaders, supported by DEI experts, is really important, because that ownership makes a real difference,” says Maynard.

She emphasises that gender diversity needs to be considered through a wider DEI lens. 

“Gender diversity needs to be part of a wider conversation about creating inclusive workplaces, which is beneficial for everyone, including straight white men. Inclusivity shouldn’t be about just focusing on one group. It is important that women don’t experience bias and of course they should be able to reach their goals, but the bigger picture is to create inclusive workplaces so that everyone can achieve their potential. I think if we do this work, those sticky numbers on gender might start to shift.”

Another head hunter is blunt. “The pie is shrinking. Asset management is only growing in little pockets of private markets, private equity, and quant. But that doesn’t leave much room for women who aren’t senior.”


Women enter the industry at relatively higher numbers as analysts and researchers, say industry participants. CFA UK data would support this. The number of women who enrolled in the CFA Program in the UK in 2020 stood at 7,967. The number of men was 10,104. 

Keeping these women in the industry as they gain seniority is a significant challenge however, as the pipeline begins to narrow. According to Citywire data, the average turnover rate for female fund managers in 2021 stood at 44%. For men, the figure was 31%.

“You hire a senior portfolio manager. What then? Do they feel like they belong on the team? Do they feel that they belong in the culture? Retention is a massive issue,” says Penny.

In 2019, Northern Trust Asset Management undertook a DE&I strategic assessment at a firm level to further develop and invest in its DE&I strategy, and identified three components as being critical for progress: the need to drive accountability at the top, from the chief executive down; the need to enhance and develop programmes and placement; and the need to advance culture within the firm. Marie Dzanis, Head of Northern Trust Asset Management, EMEA, has been spearheading initiatives across all these areas, and says all three are important. 

“There’s a lot more work to be done to support female portfolio managers in their careers and journeys. We need to understand better where there are cliffs, where people hit promotional caps, and where the ledges are, where we are losing people,” she says.

For his part, van Weelden highlights the importance of paternity leave to retain women. “Paternity leave is really important. It’s something that has become the norm in the Nordics but that is still kind of frowned upon in the UK. Men feel they could be putting their jobs at risk or could lose out an opportunity to be promoted. Organisations need to be rewired and encourage men to take paternity leave,” he says. 

Re-thinking recruitment practices is also important, suggests Stanley Stearman, Commercial Director at Logan Sinclair Search. “I think blind recruitment is a good first step. In removing identifiable details from CVs and submissions, it is hoped that unconscious biases are limited or eliminated,” he says. He does point out however that the process is not perfect, in fact sometimes hampering diversity hires where firms are actively seeking diverse candidates, and also removing the ability for referrals.

Stearman also points out that there is a lot of work to be done on job descriptions to neutralise gender biases. Superlatives like ‘expert’ and ‘specialist’ often promote biases to those more confident candidates. Additionally, removing superfluous requirements or those ‘desirable’ skills rather than ‘required’ skills is helpful, as research has shown that women are less likely to apply for positions unless they meet 100% of the requirements.

“We have also seen some job descriptions that include male/female which also needs to be removed to be inclusive of non-binary candidates,” he points out.

Dzanis also highlights the need for diversity within selection committees themselves. “You also have to think about the recruitment and promotion process. For example, it’s not enough to just interview a diverse slate of candidates, but there also needs to be a diverse slate of interviewers to offer different perspectives and make the best hiring decisions,” she says.

The Rise of Mixed Teams

More broadly, some trends in asset management should help shift the diversity needle. The fact that asset managers are moving away from star manager cultures and into mixed teams is one of them, say commentators. Mixed teams have almost doubled in six years, according to Citywire data. They have also performed best in all markets on a risk-return basis. Asset managers are recognising that mixed teams bring cognitive diversity, while eliminating key man risk and succession concerns. In 2016, just 6.7% of the Citywire Fund Manager Database was made up of mixed teams. Now that number has risen to 11.8%. 

Changing Cultures

Fundamentally, the issue of gender parity cannot be addressed with proactive recruitment, retention, promotion, and other programmes – essentially, addressing structural inequalities and changing embedded cultures. In its 2021 report, Harnessing the Impact of Female Talent in Asset ManagementHeidrick & Struggles says organisations must tackle deeper cultural issues such as bias, discrimination, deep gender pay gaps, and at times, harassment.

“The investment industry needs to come together and have a frank dialogue about what the challenges and the opportunities are. We need to ask the tough questions around how we are managing talent,” says Dzanis.

While there is still a great deal of work to be done, van Weelden is hopeful about the future. “I am hopeful that we are at a tipping point. At a grassroots level, there are many innovative initiatives taking place. It’s a bit like ESG, there is a building up of momentum towards change, which will only get bigger,” he says. 

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