Be it stocks or MFs, women managers are giving men a run for their money

Not just in India, even in the US, women, chief executive officers are putting up an impressive show.

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In the last six months, S&P 500 companies led by a woman CEO have outperformed those led by their male counterparts by an average of 1.2%

It is often said that the financial industry is largely a man’s world.

The latest analysis on gender diversity in the Indian mutual fund industry by Morning Star showed that of the 376 fund managers, 30 are women, who are managing funds either as primary / secondary managers or have oversight as heads of equity/debt. Currently, the total count of women fund managers has increased from 28 last year to 30. “With a meager 8% representation, women still remain drastically underrepresented among the ranks of mutual fund managers," said the Morningstar Inc. report on 4 March.

Still, this has not stopped women from putting their best foot forward.

“Out of the total open-ended assets managed by women fund managers, 80% of the asset under management (AUM) outperformed the peer group average on a one-year basis, 80% of the AUM outperformed on a three-year basis and 74% of the AUM outperformed on a five-year basis - a feat truly worth commending," said the Morningstar report dated 4 March.

Not just in India, even in the US, women chief executive officers are putting up an impressive show.

An analysis by Winvesta – fintech start-up offering Indians a platform to invest in international markets, compared the performance of S&P500 companies led by a women CEO to their male counterpart. The research showed that in the last six months, S&P 500 companies led by a woman CEO have outperformed those led by their male counterparts by an average of 1.2%.

For the 25 companies that were public on the date that a female CEO took control, the average outperformance to S&P500 has been an annualized 5.14%. Further, if one excludes women CEOs who took over in 2020 and 2021, the average outperformance to S&P 500 has been an annualized 3%, showed the Winvesta research.

These numbers look simple but they weren’t easy to extract and, in some cases, they are only an approximation. That’s because American companies aren’t required to disclose the gender composition of their workforces. Without such a requirement, Morningstar and Flowspring used ingenious workarounds, which I double-checked the old-fashioned way, by directly contacting all 25 companies. I bear responsibility for the final result.

(A report on racial and ethnic diversity in these workforces would be worthwhile, too. But I have been unable to find reliable numbers on those criteria.)

Morningstar compiled data on all portfolio managers of mutual funds and exchange-traded funds for American companies. The list includes anyone designated as a portfolio manager on a fund prospectus, whether employed directly by a fund company or indirectly as a so-called subadviser.

The researchers used an algorithm to extract obvious female names and did biographical research to determine gender when the names weren’t clear. Warren Miller, the founder of Flowspring, filtered the data for the 25 biggest companies. He refined his data with help from Emily Laermer of Ignites, an industry news service.

I then called and emailed the companies and gave them ample opportunity to correct the numbers. Most confirmed the initial findings.

In some cases, I adjusted the numbers upward when companies demonstrated persuasively that there had been a miscount. A few companies questioned the final details — which could alter their own grades by a percentage point or two — but they didn’t contest the overall results.

This exercise produced a troubling finding: Anywhere from 94 percent to 70 percent of the portfolio managers for American-registered funds at the biggest companies are men.