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How Do Women and Men Stack Up at Managing Funds?

A recent Morningstar report shows women are vastly underrepresented but it’s not due to performance.

Morningstar began formally studying the gender of fund managers in 2015, even though women have always been anecdotally underrepresented in the industry. It found men outnumbered women nine to one—a higher ratio than that of other professionals, such as doctors and lawyers.

The reason for the disparity is not entirely clear but it’s not performance. In a recent study, Morningstar found women are just as good at managing funds as men.

The study considered the performance of actively managed, U.S.-based equity and fixed income funds, and those managing them, since 2003. Morningstar used three statistical tests and found there was no significant difference between male and female fund managers or the performance of funds run by teams that included men and woman.

“If women fund managers have delivered worse returns than men, their exclusion from the industry would be understandable,” the report said. However, that wasn’t the case.

“Our goal is not to estimate a manager’s performance potential based on an exogenous characteristic such as gender. Rather, we are examining whether the current industry trend of decreasing female participation is justified through the lens of performance. In effect, we intend to determine whether the industry would perform worse with more female fund managers.”

The total number of mutual fund managers steadily climbed from less than 2,000 in 1990 to more than 7,000 at the time of the financial crisis in 2008. But during that period it added almost exclusively men, who gained 85 percent to 90 percent of the net new portfolio-manager roles. The number of women who are fund managers has been stagnant, at just under 1,000 for years.

More recently, however, the number of men in the industry decreased as the number of portfolio-managers declined from 7,657 in 2015 to 7,400 in September 2017, according to Morningstar. Meanwhile, not as many woman have left.

Since performance has not been the driver for a lack of diversity among fund managers, research going forward will be focused on other factors potentially contributing to the gap, Morningstar said in the report.

Some factors Morningstar is taking a closer look at include managers’ educational backgrounds, including types of advanced degrees or professional certifications, and the composition of fund management teams.

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