Abysmally Low Numbers of Women Fund Managers: Not a Question of Ability but Opportunity
By: Rachita Sharma
Representation of women among mutual fund managers in India has emerged as a matter of concern. A recent report by research firm Morningstar India has revealed that of the total 376 fund managers operating in India, only 30 happen to be women. This comes in at a meager eight percent. When compared to the global percentage of women fund managers which stands at 14 percent, this number looks even lower. However, the global fund landscape has been no better. The report revealed that in terms of gender diversity, the global fund industry has not really changed much over the past 20 years. At the end of 2000, the representation of women fund managers stood at 14 percent. Unfortunately, the number remained the same 20 years later as, at the end of 2019, only 14 percent of fund managers were women.
Breaking down Number & Distribution of Women Fund Managers
Taking a deep dive into the numbers brought to the fore by the report, one sees that the total count of women fund managers in India only increased by two numbers in a span of one year. In 2019, the industry had 28 female fund managers and in 2000, it increased to only 30. Interestingly the industry saw a healthy rise in the number of total fund managers. The number increased from 352 in 2019 to 376 in 2020.
Of the 30 women fund managers spread across 19 Indian fund houses, only two fund houses currently have three or more women fund managers. Six fund houses had two women fund managers while 11 fund houses had at least one woman fund manager. In terms of tenure, 10 of the 30 women fund managers have been in the field for over five years. 12 of them have been managing funds for between two and five years. However, eight fund managers have a relatively lower experience of managing/co-managing funds below two years.
Asset managed by women Fund Managers
Although 2020 came as a rude shock to every sector and industry, the mutual fund industry has fared well in terms of AUM over the past year. “Despite facing a treacherous period of sharp market corrections, a full-blown pandemic, and strict lockdowns, the mutual fund industry’s assets during the last year have increased by 9.5 percent, with the total assets being managed now standing at approximately Rs 30.50 lakh crore as on January 2021, up from Rs 27.85 lakh crore a year earlier,” said the report by Morningstar.
Spread across all firms, 13 percent of the total Asset Under Management (AUM) is managed by women fund managers either as primary/secondary managers or have oversight as heads of equity/debt. In absolute terms, this number comes in at approximately Rs 3.59 lakh crores.
While the total assets managed by women fund managers has gone up from Rs 3.41 lakh crores seen last year, this number has fallen in percentage terms from 15 percent last year to 13 percent of the overall industry AUM as of January 31, 2020.
“Out of the total Rs 4.11 trillion they managed, Rs 1.77 trillion (43%) was in fixed-income funds, excluding money market, liquid and overnight funds; Rs 1.09 trillion (26.6%) in money market funds, liquid, and overnight funds; Rs 1.03 trillion (25.1%) in equity funds; Rs 18,000 crore (4.5%) were allocation funds; and the solution and other category cumulated to Rs 3,000 crore (0.7%),” quoted the Morningstar report.
Not a Question of Ability
It comes in as a curious case, as to why the number of women fund managers is as low as it is. The ability for one is certainly no factor as concluded by the report. The Morningstar report concluded that of the total open-ended assets managed by women fund managers, 80 percent of the assets under management (AUM) outperformed the peer group average on a one-year basis. 80 percent of the AUM outperformed on a three-year basis and 74 percent of the AUM outperformed on a five-year basis which is a feat truly worth commending.
It is important for the industry to deep dive into unearthing the underlying cause of the abysmally low number of women fund managers. An amalgamation of factors such as structural barriers and implicit biases have long played a crucial role in keeping women out of the fund managing territory. While the role has often been viewed as a male-dominated one, yet number indicates that women fund managers can outperform their male counterparts when given the opportunity.
A separate study published by consulting firm Deloitte in 2019 presented a rather interesting observation. It stated that across financial services organizations, for each additional woman added to the C-suite, the number of women in senior leadership roles rose threefold. This essentially means that in order to have more women enjoy longtime and satisfying careers in senior leadership positions, the financial industry requires more women to come on board the C suite.
In order for the corporate world to make this cyclic phenomenon work in its favor, there needs to be a rise in intentional recruitment, innovation in retention, supportive reentry, as well as mentoring, sponsorship, and strong peer networks.
Hiring more women makes business and financial sense. We can only hope to see the numbers telling a different story next year.