At Institutional Investors and CNBCs Delivering
Alpha conference, Systematica Investments CEO
Leda Braga observed that when she started working at London
hedge fund BlueCrest Capital Management, she was 34 weeks
pregnant, as Institutional Investors
Tom Buerkle tweeted.
Braga also said that rumor had it that when BlueCrest
managers interviewed her, they failed to notice her pregnancy
an anecdote that illustrates the obliviousness of some
quants. But her story caught my attention for another reason.
When Braga launched her firm earlier this year, London-based
Systematica became one of the rare hedge funds run by a
A 2009 study by New Yorkbased not-for-profit National
Council for Research on Women, now called Re:Gender, found that
women-led hedge fund firms made up only 3 percent of managers.
The number of women investment professionals in hedge funds is
similarly tiny. The male-female imbalance persists despite the
fact that hedge funds often claim to be meritocracies.
The observation that the hedge fund industry lacks gender
diversity is hardly new. My colleague
Fran Denmark wrote a feature on women hedge fund investors
before the financial crisis. Recently, as the issue of women in
the workplace has become a popular topic, the hedge fund
industrys lack of women has come up more often.
As I was researching this years
Hedge Fund Rising Stars, our annual list of 30 hedge fund
up-and-comers, I hunted for eligible female portfolio managers,
but the effort was disheartening. In what is a very tough hedge
fund start-up environment, Systematica was one of the few hedge
fund firms, if not the only one, launched in the past 18 months
with a woman in charge.
I wanted to find the reasons for this and explore some
solutions, so I reached out to some influential women. Among
them: Afsaneh Beschloss, CEO of Washington-based fund of funds
Rock Creek Group; Nadine Terman, CEO of San Francisco hedge
fund firm Solstein Capital; and Katherine Chan, a partner at
the New Yorks Anandar Capital Management. These three
come from different backgrounds and are at different points in
their careers. All three are respected, successful and have
made it a point to further the cause of women in alternative
Weve produced a video of these three discussing these
issues. Parts 1 and 2 of a three-part series are already on the
Institutional Investor web site. You can watch them,
here. The third installment, which examines what needs to
be done to address gender imbalance, will run next week.
My conversations pointed to five areas that need to be
addressed: education, culture, mentorship and hiring, workplace
flexibility and access to capital. Let me run through them.
The most important. High-school girls and college women need
to learn finance and be encouraged to see investment management
as a viable career option.
I attended an all-girls school in Bristol, U.K., where
academics were highly prized, and we were told we could be
anything we wanted. But I didnt even know the asset
management industry existed until after graduating from
college. And even my classmates who excelled at math and
science never talked about Wall Street or investing. A sensible
ambition for girls in those years was medicine or the law. (I
did, by chance, learn of a young woman who graduated a few
years after me who is working at a London hedge fund firm.) In
college we used to laugh at people studying computer science,
which is even more embarrassing since I studied at the
University of California, Berkeley, for a year.
A friend, Seema Hingorani, a former chief investment officer
of the New York City pension system, is addressing the problem
of getting girls interested in finance through a
not-for-profit, Girls Who Invest, that she founded.
Inspired by Girls Who Code, which seeks to introduce
girls to computers and programming, the organization aims to
familiarize high school and college women with finance and
hedge funds. This effort needs to go farther; all liberal arts
majors should learn investing basics.
I always thought the locker room culture of the trading
floor was one reason you didnt see more women traders and
portfolio managers. But thats not the feedback Ive
gotten from women hedge fund managers, especially younger ones.
They did not feel uncomfortable, they said.
Early in my journalism career, I covered
financial advisers. In those years the industry was hit by
sexual harassment and discrimination cases at various brokerage
offices. These were depressing stories, and what I realized was
that these branches were fiefdoms in which men held power with
little oversight, particularly when it came to gender
discrimination. In the decade since the so-called Boom-Boom
Room cases were resolved, financial services have made strides
in the fair treatment of women employees. As mostly small,
privately run businesses, hedge fund firms could have turned
out the same way as those brokerage offices particularly
since the stakes, and profit potential, are much higher. That
they didnt is a testament to progress. But greater
efforts need to be made to recruit and retain talented
Mentorship and Hiring
Although its true that Wall Street is making an effort
to hire more women, hedge funds and private equity firms
clearly need to do a better job. I discussed this with
Katie Hall, founder, CEO and co-CIO of San
Franciscobased outsourced CIO firm Hall Capital Partners.
Both stressed the need for managers to hire people who are
different from themselves by gender, race, financial background
and education. They argue that diversity of experience leads to
diversity of thinking and produces smarter decisions,
better-run firms and wiser investment decisions.
Yet the fact remains that representation of women among
hedge fund firms and private equity firms is significantly
below 50 percent. A Bloomberg study of women in the top ranks
of private equity found that at the largest firms, women
account for only 11 percent of senior management. Public
pension plans can play a transformative role since they request
diversity statistics when they hire managers; they can make
those data public and push for change. This strategy would be
far more effective than pressing managers to boost diversity,
as New York City Comptroller Scott Stringer has said the Big
Apples pension funds will now do.
Once women are hired, they benefit from mentors, who can
guide them along a career path. Asset management has long been
a believer in mentorship. Organizations like 100 Women in Hedge
Funds seek to help women advance, but many of the women
Ive talked to across the hedge fund ecosystem feel that
more needs to be done to foster mentorship and
This was a key takeaway from the
Women in Hedge Funds video series. Anandars Chan
makes the point well in our third video, saying that the
industry needs more systems, like flexible work hours and
accessible child care, to keep women in the workforce. If more
men were primary caregivers, these structures would already
exist. It may be late to make that change, but it can be done
if firms want to.
Hedge fund manager
Paul Tudor Jones II took some heat last year when he
suggested that the 24-hour nature of the markets does not lend
itself favorably to women who have babies. But Beschloss says
she knows many women who, when their children were young, liked
to trade, say, the Japanese markets, which are 13 hours ahead
of New York, because being up at night fit their schedule. Her
experience suggests that with the right structures, hedge funds
might be a fantastic industry for families. If Third
Daniel Loeb can trade from the
Hamptons, why cant a mother trade at night from
Access to Capital
For Solstein Capitals Terman, this is crucial. Women
today control 1 percent of overall hedge fund capital. The main
thing that will move the needle, she says, is getting more
money into their hands, both at established and new firms. To
help facilitate this, Terman has run her own conference,
together with 100 Women in Hedge Funds, in San Francisco
for the past two years, bringing together women hedge fund
managers with potential allocators.
The hedge fund gender gap is often dismissed as a rich
persons problem. In a two-income family, in which one or
both are earning more than $1 million a year, one is likely to
drop out of the workforce for a time, most likely to take care
of children. That person is probably going to be the woman. For
poor and lower-middle-class women, thats not an option.
The affluent and well educated have the luxury of choice, and
Wall Street has clung far longer than most professions to the
white picket fence notion of family. There is also a case to be
made that the world does not need more hedge fund managers, and
that women should go into other investing areas, business or
politics. There is one overwhelming reason, however, why the
lack of women on the investing front line matters: money.
Especially in the U.S., hedge fund management has been one
of the greatest wealth creators of the past decade
probably behind only tech (also not known for its diversity).
Yet women have disproportionately not participated. A woman has
never appeared on Alphas annual Rich List.
After Systematicas Braga, the most successful woman in an
investment management role (and I stress
investment, because that is the most profitable and
powerful job at a firm) may be Anne Dinning of New Yorks
D.E. Shaw & Co. Dinning herself dropped out for a number of
years before returning to Shaw and eventually becoming one of
the firms four-person management team.
As for the quants, obliviousness may be the next best thing
to gender neutrality. But not noticing is no way to make real
Follow Imogen Rose Smith on Twitter at @imogennyc.