Home' Trinidad and Tobago Guardian : June 14th 2015 Contents SBG10 MUTUAL FUNDS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JUNE 14 • 2015
The following is a Q&A:
Why raising the percentage
of mutual fund managers
who are women could help
investorsDiversify. The financial
industry says you have
to do it with your
investments. But when
it comes to who s run-
ning mutual funds,
diversity can be tough
to find. Less than 10 per
cent of all managers are women, according to
a recent tally by Morningstar.
Women make up similarly small percentages
across the spectrum of investment profes-
sionals, from money managers to analysts to
consultants, according to a study by the State
Street Center for Applied Research. After sur-
veying hundreds of professionals around the
world, the think tank found that women
approach investing in a complementary way
Suzanne Duncan, the centre s global head
of research, recently talked about why that
means better-balanced mutual fund manage-
ment teams could lead to better results.
Answers have been edited for clarity and length.
Why should I care that so few mutual-
fund managers are women?
It s about the return on investment.
Men and women approach investing very
differently, but in a complementary way, so
diversification can make a difference when it
comes to managing money.
It s about how we re wired biologically to
define and measure success. Male mutual-
fund managers tend to focus on outperforming
their benchmark or their peer group. They
want to be in the top quartile. The female
definition of success is not that. It is to achieve
the long-term goal.
For the professional, that could be her organ-
isation s long-term goal. Or, for the individual
investor, the most common long-term goal is
to comfortably retire.
There is no right or wrong answer. We do
need near-term metrics to evaluate success,
but we also need to be focused on the long-
term goal of what success should actually
result in. If you put those together, you can
achieve a superior outcome.
It doesn t seem like there s much research
saying that women are better investors
than men, in the short- or the long term.
The more important question in our view
is: Are men, together with women, better
investors? There isn t research about that,
specifically for investment performance,
because the sample size is too small. There
aren t many teams of men and women man-
aging money. It just doesn t happen in today s
world. But research has been done about highly
successful teams in other areas, and it s not
about high IQ. It s about diversity. One of the
characteristics of having a high-performing
team is gender diversity.
How else did you find that male fund
managers differ from women?
Men, on average, tend to take credit for their
decisions when they re successful. And when
they re not successful, they blame others.
Women are the opposite. We don t take credit
when we re successful, and we blame ourselves
when we fail.
We asked portfolio managers around the
world: Tell us about a recent successful invest-
ment that you made and why were you suc-
The No 1 reason men gave was "my expe-
"My analytical abilities" was No 2.
"My ability to strip out my emotions from
my investment decisions" was No 3. My, my,
my. All factors that are internal to them. The
next question we asked was: Tell us about a
recent investment you made that was not so
successful and why. The No 1 reason was "the
markets took a turn for the worse." No 2 was
It s a coping mechanism to deal with fear.
We asked the portfolio managers how many
months of underperformance it would take
to be fired. The average response was 18
months, a very short-term basis. So we end
up building this entire system, this machine,
on a very short-term basis. And we are taking
away from the ability to focus on what we
should, which is the long-term goal.
Enter the female into the equation.
Are you seeing more of a push to get more
women into these roles?
Yes, there s the 30% Club (a group that
advocates getting more women on boards of
directors). The CFA Institute just had their
first-ever Women in Investment conference.
Gender diversity has picked up momentum
in a pretty meaningful way. As we re out there
doing face-to-face interviews, we find that it
is top of the list in terms of not only awareness
but also execution on what to do about the
issue. And that s new. That s largely since the
Do you think it s because of the crisis?
The crisis was a very powerful inflection
point. Everyone is taking a step back.
It started with a conversation between
spouses, and that s trickling through the whole
system. Males have been mainly responsible
for the decision making in couples finances
in this country, and after the financial crisis,
couples said, "We just lost a lot of money.
Can we start talking about partnering and
making decisions together as opposed to the
male making decisions in isolation?"
That is trickling through the financial adviser
community, where the first movement has
been. Now the mutual-fund managers, who
are selling their product to the financial advis-
ers, now they re paying attention.
Think about the DNA of this industry. Think
about what these mutual-fund managers do
on a day-to-day basis. They construct diver-
sified portfolios. That s what we live and
breathe in this industry. We have yet to apply
diversification when it comes to talent. It is
a huge missed opportunity. If we can do it for
assets and securities, I have to think we can
do it for talent. And diversity in general, not
just gender but also ethnicity. It sounds like
a good investment to me. AP
Why it matters that so few
mutual fund managers are women
This undated photo provided by the State
Street Centre for Applied Research shows
Suzanne Duncan, its global head of research.
Duncan spoke to The Associated Press about
why raising the percentage of mutual fund
managers who are women could help
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