Investing with portfolio management teams that include women can be good for your portfolio.
As a responsible investor, Federated Hermes realizes the importance and benefits of advancing women in the workplace, and today is no exception. It’s American Business Women’s Day, and as we celebrate the contributions of female professionals across the country, we’re especially grateful for Federated Hermes’ impressive women that add value every day through investing. Approximately 88% of our assets managed in the U.S. have one or more women as named portfolio managers vs. approximately 19% of global industry assets.
Citywire’s 2020 Alpha Female report on the gender divide in portfolio management reveals how far women have to go in asset management:
- It will take female portfolio managers until 2215 to reach the same level of representation in the asset management industry as their male peers at the current rate of change.
- Among 16,000 managers, female investors accounted for just 11% – up from 10.3% in the first Alpha Female report in 2016.
- The proportion of female investors in the U.S. is a paltry 9%. Federated Hermes pulls above its weight with 16.25% U.S.-based female portfolio managers.
Women are good for portfolio returns. Research has shown that mixed-gender teams produce better risk-adjusted returns than male-only teams in the long-run, in part because women improve the risk-reward balance. In a recent report, Goldman Sachs stated that mutual funds with female managers beat their male counterparts by a full 100 basis points year-to-date through late August. The report notes that even after adjusting for risk, female-managed funds have outperformed their counterparts amid the pandemic-related market swings.
Gender diversity is a critical social issue in the “s” pillar of ESG. As Supreme Court Justice Ruth Bader Ginsburg asserted, women belong in all places where decisions are being made. Female portfolio managers stand tall at Federated Hermes, and are a key part of the alpha equation and our responsible investing thesis. This American Business Women’s Day, take a look at who is managing your assets. Entrusting your money with diverse teams is not just bridging a gender divide, it can improve the balance of risk and reward in your investments.