Is the tide turning for female fund managers?

In an industry that has historically been very much a man’s world, it seems the tide is turning – slowly. It was cheering to read the recent FTSE Women Leaders report, which found among many other things that investment companies account for almost half of the 92 FTSE 250 company boards with more than 40% women members.

Moreover, they dominate the list of companies with the highest percentages of women on the board. Seven trusts including International Public Partnerships, Aberforth Smaller Companies, Finsbury Growth & Income and Impax Environmental Markets all made the Top Ten Best Performers list, with at least 60% women board members.

But progress is slower further down the ranks, among investment company fund managers. Data from the AIC shows that more than a quarter (26%) of companies with named managers have at least one female at the helm – but the vast majority work alongside other managers. Of the 89 investment companies with a single main manager, all but five are run by men.

The gender imbalance is “hard to explain and impossible to justify”, says Emma Bird, an analyst at broker Winterflood. “Indeed, I believe that attracting and retaining talented women is one of the key challenges facing the investment management industry at present.”

One positive aspect is that the improving male/female balance at board level may well filter down over time. Andrew McHattie, publisher of the Investment Trust Newsletter, makes the point that with growing numbers of women on investment trust boards, “the drive to ensure there are more opportunities for talented female fund managers has greater momentum”.

Meanwhile, although female fund managers are clearly still seriously underrepresented in the asset management industry, Russ Mould, investment director at AJBell, points out that “there does seem to be a pick-up in the number of women in the wider teams running funds and trusts, as asset managers begin to recognise the importance of diversity in their team structures.”

Sue Noffke, who runs the Schroder Income Growth trust, concurs. Noffke is one of the few sole female investment company managers, and has the long perspective of a 30-year career in the industry; although there have been “disappointingly few changes” in the number of female managers over that time, she believes there is less emphasis on ‘star fund managers’ and more focus on partnerships or team-based approaches. “This is a more collegiate approach, and that can be particularly helpful in providing an entry for new and diverse talent,” she adds.

Importantly, there’s growing recognition that diversity – in terms of age, background, ethnicity, degree subject and character, as well as gender – brings strength. “A partner or team approach can blend individual skill sets together with their personal traits so that the whole is greater than the sum of the parts, and diversity helps ensure that the decision making processes are more robust through blending a range of diverse perspectives,” explains Noffke.

There may not be many women managers, but they are highly regarded – from the likes of the highly experienced Katie Potts (the powerhouse behind Herald Investment Trust since 1994), JPMorgan’s Georgina Brittain and of course Noffke, to team players such as Laura Foll at Henderson Opportunities Trust and Lowland, Charlotte Cuthbertson on MIGO Opportunities Trust and Charlotte Yonge on Personal Assets.

Baillie Gifford has a number of female co-managers, while Abrdn’s unusually female-dominated smaller companies team is also “performing with distinction”, says Mould. However, he adds, “the simple fact that we are having to highlight examples shows just how far there is to go before female fund managers have equal billing with their male counterparts."

So what do women managers bring to the investment management party? The debate around the differences between male and female fund managers has been around a long time and has been the subject of various studies over the years. 

In particular, according to Mould, “the role of testosterone in decision-making is a key biological difference, with some evidence that female fund managers are better decision-makers because they are not overly impacted by rising testosterone levels, which results in more considered risk-taking over time”.

Noffke makes the related point that because investment companies lend themselves so well to long-term investment approaches with “less emphasis on trading and short-term strategies”, women may actually be a particularly good natural fit as managers in that respect.

Abby Glennie, who manages Abrdn’s Smaller Companies Income trust, agrees that the typically female quality of patience is a valuable one. In part that’s simply about dealing with the administration and compliance involved in running financial businesses. But in addition, she says, “in terms of stock decisions, as long-term investors we sometimes have to sit tight, be patient and wait for an investment case to play out. If we get it right, we’ll benefit from it for a long time.”

“It’s difficult not to speak in stereotypes, but women typically have a lot of the skills people think you need in this job,” Glennie continues. “It’s about running the fund, but also about managing the relationship with the board: I think women often have better interpersonal skills, and may be better at taking challenge from the board positively.”

Those skills can come in very handy in the core business of engaging with companies and analysts too: “Women are typically good listeners, skilled in drawing out valuable information obliquely through conversation rather than by asking directly.”

Multi-tasking and time management are also key attributes, Glennie continues. “Amanda [Yeaman] my co manager has a three-year-old and a six-year-old; we joke that no one knows how to time-manage better than the mother of two young children,” she adds.

Looking forward, Noffke is hopeful that is that the pipeline of female talent starting out in investment will find it easier to navigate the path to fund management than she did.

She points out: “The playing field is more level today, with recruitment policies aimed at recruiting widely rather than from traditional narrow pools.” That’s borne out by Glennie’s experience at Abrdn, where two graduate recruitment drives were carried out last year – one “mainstream” and one through the Girls Are Investors network, aimed specifically at female candidates.

The investment industry is not always noted for its eagerness to embrace change, but there do seem to be signs that it is finally, gradually, moving in the right direction. There’s still a long way to go, though.