The fund industry is short key talent, though there are pockets of success.
The more things change, the more they seem to stay the same—at least when it comes to women in the fund management industry. Morningstar published its first in-depth study of fund managers by gender in 2015 after observing first-hand over decades that there are disproportionately fewer women in the fund industry. Laura Lutton, director of manager research for Morningstar Research Services, studied the rates of women managers in the United States, Spain, and Hong Kong, and found that women were underrepresented compared with their numbers in other professions.1
To broaden the perspective, Lutton and quantitative analyst Madison Sargis recently harnessed Morningstar’s expansive global database to explore fund managers by gender on a global scale.2 Sargis and Lutton considered 26,340 managers of funds registered in 56 countries, making this study the most comprehensive of its kind. The results were disappointing.
Digging for Data
Compiling the data itself involved both inspired statistical analysis and old-fashioned legwork. Sargis and Lutton determined the gender of 15,996 managers primarily through information supplied to Morningstar by fund companies. For the remaining 10,344 managers, they identified gender by running first names through an algorithm that assigns a probability of being a woman based on local census data.
In cases where Morningstar had gender data that did not match the algorithm’s probability, they manually verified gender, looking to professional photos and biographical descriptions. They did the same for managers with gender-neutral first names and in regions where the algorithm may not be sufficiently sensitive to local naming conventions. (For example, in France, Patrice is more often a man’s name, while in the United States, Patrice skews feminine.) They did not include countries where first names are locally reflected by characters but then are translated into letters for storage in Morningstar’s database, or countries where first names typically are not associated with a specific gender. As such, China, Japan, and Taiwan were excluded. Once they determined each manager’s gender, Sargis and Lutton looked at the managers assigned to mutual funds and exchange-traded funds by listed domicile. (Some funds are domiciled in multiple countries and so were included more than once in the study.) In the United States, public documents reflecting fund managers’ names are widely available and changes are reflected quickly in Morningstar’s database. In other markets, there may be cases where the available management information on a given fund is outdated. Even so, the gender gap among fund managers is wide enough that an occasional inaccurate data point would have minimal effect on the overall results.
Adding It Up
Indeed, the gap is a chasm. Across 56 countries, only one in five funds has at least one manager who is a woman. What’s more, that figure did not improve over the course of the eight years covered by the study, from the global financial crisis of 2008 through 2015. Sargis says, “I expected women to be underrepresented, but the lack of improvement was discouraging.”
There are geographic bright spots. Women have been named fund managers at a relatively higher rate in some smaller markets, including Hong Kong, Singapore, France, Spain, and Israel: At least 20% of fund managers are women in these markets, with Singapore in the lead at 30%. However, in larger financial centers, such as Brazil, India, Germany, and the United States, the percentage of fund managers who are women is below the global standard. (The figures are plotted on the map leading off the Global Briefs sections on Page 27.)
In fact, a mere 10% of U.S. fund managers are women. Compare that to the percentage of U.S. lawyers who are women (36%) or doctors (33%)—professions that require similar levels of education—and it is clear that the fund industry is drawing from a relatively limited talent pool. That relationship holds true in other countries. In all cases where comparable data is available, women make up lower percentages of fund managers than lawyers and doctors (E X H I B I T 1 ).