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Women May Have Better Odds as Passive Fund Managers

Our research shows women’s notable gains in some fund management areas

Madison Sargis, Morningstar, Inc. and Laura Lutton, Morningstar Research Services LLC


While women remain significantly underrepresented in fund manager roles worldwide, our comprehensive study showed notable gains in some areas. The study showed that women are more likely to manage a passive fund than an active fund, and they’re more likely to be chosen to run a fund of funds than a fund that buys and sells individual securities. Women are more likely to share management responsibilities with others, while women on their own oversee a lower number of funds.

The details behind our research

Our study looked initially at where women are managing funds by geography. From there, we examined whether certain characteristics are more prevalent among funds with managers who are women relative to those run by men. To begin, we defined our dependent variable to be the manager’s gender and then we deployed a logistic regression to our data. Our technique allowed us to measure gender among each independent variable, so our model told us the change in odds of the manager being a woman for a typical, one-unit increase in each variable. We controlled for factors such as region, fund age, and manager tenure so we could be certain that our results were not swayed because of regulatory regimes or because opportunities are skewed based on the fund’s age or the tenure of a manager.  

A woman’s odds of being a passive fund manager

One of the most statistically significant findings of our study is that a woman is more likely to manage a fund that closely tracks an index than to manage a fund that is actively managed, meaning it deviates from the benchmark index. The odds of a woman managing a passive fund over an active fund in the same asset class is 1.36:1. (Relative odds of 1:1 would indicate an even chance.) For a fixed-income fund, her odds of being named a passive fund manager over active are 1.23:1. And a woman’s odds of running a passive allocation fund versus an active fund are the highest: 1.41:1.

At first glance, we could assume that women are benefiting from a growth area for the industry. One might argue that women are earning jobs as passive fund managers because more passive funds are being launched, and that it is easier for a woman to earn a newly created position than unseat the existing manager of an established fund.

Our study’s construction, however, indicates that women’s odds are improving beyond industry growth. In our model, we controlled for both the age of the fund and the manager’s experience level. We also ran our study each month to capture as much of the industry shift to passive management as possible.

Put another way, the controls allow us to determine whether a woman’s odds of managing a passive fund have increased or decreased absent of industry trends, and we find that women still are far more likely to manage passive funds than active funds.

Passive fund managers vs active fund managers

Conversely, our study found that women have lower odds of managing an active fund, which is a longer-established portion of the mutual fund industry. We do not suggest, however, that women are moving from active to passive management.

Active fund management requires different skills than those required of passive fund managers. With active funds, the manager aims to deliver higher returns than the fund’s benchmark index by assembling a portfolio of securities. Active managers are responsible for every investment decision. A passive fund manager’s objective is to deliver returns that match the benchmark and they seek to ensure that the owned securities meet the outlined investment criteria.

Our analysis cannot tease out whether women are being disproportionately offered passive management roles or if they are expressing a preference for them. Regardless, the data tell us that the average fund manager who is a woman is less likely be involved in active management. 

This blog post is adapted from an article that originally appeared in the April/May 2017 issue of Morningstar magazine. Read the full article or subscribe to the magazine for free. 

Please see below for important disclosure. 

Read the full research paper “Fund Managers by Gender: The Global Landscape.”

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Important Disclosure

The information, data, analyses and opinions presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission.

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