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“Ramius gave the new fund institutional presence, which was a factor in choosing them as our first allocation to a women-owned fund under the emerging manager program,” says Kirk Sims, who runs the Illinois fund’s emerging manager program. “Quadratic was a good fit for the investment profile of our hedge fund portfolio.”

Quadratic may be off to a strong start, with about $400 million in assets, but Davis is realistic about the long road ahead and the challenge of attracting more investors.

Hedge funds don't exist in a vacuum. They sit at the top of the asset management ladder — the most competitive and lucrative perch in the industry. For women to play a bigger role, they need to make progress all the way up the ladder. As Matarin’s Cotton puts it, “A bigger pipeline would make a difference.”

Yet the pipeline feeding the industry seems no bigger today than it was a decade ago, and many of the forces that have traditionally knocked women off the ladder are operating just as strongly today.

In 2013, 56 percent of U.S. undergraduate students were female, according to the most recent statistics from the Department of Education. But women are far less prevalent in the MBA programs that feed a lot of talent into the investment management industry. Some 36 percent of new full-time students at 36 leading U.S. business schools last year were female, according to the Forté Foundation, a nonprofit that seeks to promote women’s access to business education.

A recent study by Catalyst, a New York–based nonprofit focused on women’s inclusion in the workplace, found that although more than half the employees of U.S. financial services firms are female, their representation in senior leadership positions remains low in every sector. Among funds, trusts and other investment vehicles, women make up 52 percent of all employees, a rate that drops to 44.7 percent for first-tier and midlevel managers, then falls to 27.4 percent at the executive and senior levels. In investment banking and securities dealing — fields that produce many hedge fund managers — women hold just 16.1 percent of executive and senior-level positions.

BlackRock’s Kelley says she was keenly aware of her increasingly male surroundings as she rose in the hedge fund industry. “Analyst classes are 50-50” male-female, she says, referring to the initial intake of new analysts, typically straight out of universities or business schools. But Kelley increasingly found herself the odd woman out as she progressed. “It’s hard to see where your career path is when you see rooms filled with men,” she says.

Jane Buchan echoes that sentiment. As co-founder and CEO of Pacific Alternative Asset Management Co., Buchan is a model of female success in the business. Irvine, California–­based PAAMCO manages more than $10 billion in assets, making it one of the largest female-owned fund-of-hedge-fund firms in the world. Yet she says the industry has an ingrained male culture that continues to make it difficult for women to break through. “There really is more pronounced bias in alternatives” than in other areas of investment management, she contends. “This involves having a certain background, going to certain schools and specific jobs. So when somebody fits the mold, there is confirmation bias.”

Then, of course, there is the loaded issue of parenting. Motherhood has long been viewed as a career impediment, particularly in high-pressure jobs like hedge fund management. Shelley Correll, a sociology professor at Stanford University and director of the school’s Clayman Institute for Gender Research, says there is indeed a “motherhood penalty,” as it’s called in a 2007 paper she coauthored in the American Journal of Sociology, but she attributes it to “a perceived incompatibility between family and workplace” rather than to actual performance issues for working mothers. The paper was based on a study in which university students were asked to evaluate a variety of fictional job candidates with identical job qualifications but differing parental statuses. The evaluators consistently ranked mothers as less competent and less committed than women without children, or men. Fathers, by contrast, were ranked as the most competent, even ahead of men without children.

Paul Tudor Jones famously seemed to give voice to this perception bias at a panel discussion at the University of Virginia three years ago. “You will never see as many great women investors or traders as men — period, end of story,” the celebrated hedge fund billionaire said. The reason, he explained, is not because they are incapable but because motherhood acts as a “big killer” to the intense job focus that macro trading requires. Jones apologized after reports of his comments produced an outcry of complaints. Kelley, who had the first two of her three children while working at Tudor, says the environment at the firm was “very supportive.” She has nothing but praise for the mentor who gave her her big career break. “Paul is my hero,” she says.

Bias in other parts of the industry holds women back, many executives say. “The majority of allocators are men,” points out Dawn Fitzpatrick, New York–based global head and CIO of $5.6 billion hedge fund firm UBS O’Connor. “The academic data shows that people tend to want to work with people who look and act like them. We need to do a better job of educating people on the unconscious bias they have and the demonstrable benefits to bottom-line results of well-constructed team diversity.”

One route around these roadblocks might be to create more opportunities for women whose careers have not taken the well-worn path of business school to portfolio analyst at an investment bank. Women like Leslie Biddle.

After graduating from Maine’s Colby College with a BA in economics in 1989, Biddle wanted to “save the world,” so she took a position with the U.S. Agency for International Development and worked on projects in the Middle East and Africa. She moved to Overseas Private Investment Corp., where she handled political risk insurance and trade financing, then parlayed that experience into a job at utility operator AES Corp., where she learned how to run financial models and develop power plants. In 2002 she took a job as an energy investment specialist at Goldman Sachs; she made managing director two years later and partner in 2006, her rapid ascent “defying the direct and indirect biases often experienced by women,” she says.

Biddle rose to global head of commodity sales and CFO of the firm’s investments in the metals and mining sector. She left Goldman in 2011 and took a year off before joining Serengeti Asset Management — a $1.5 billion, New York–based multistrategy hedge fund firm founded by a former Goldman colleague, Joseph LaNasa III — as a partner in 2013.

Though Biddle has thrived, she worries about the paucity of women in senior roles in the industry. “What happened between college and the C-suite?” she says. “The cultural biases don’t funnel women to risk-taking roles that lead to leadership positions.” But aspiring female financiers can’t afford to get discouraged, she says, adding, “Women have to move into more risk-taking roles to overcome the biases.”

Any discussion of women in hedge funds has to touch on performance. One of the most widely cited statistics used to tout the ability of women managers — and by implication to allege bias against them in the industry — are the performance indexes published by Chicago-­based Hedge Fund Research. The company’s Women Index, which tracks 61 single-manager funds run or owned by women, has shown average annual returns of 2.1 percent since 2007, almost double the 1.1 percent returns posted by the HFRI Fund Weighted Composite Index, the firm’s broad industry benchmark. However, those numbers may not be everything they seem.

A 2015 study by professors Rajesh Aggarwal and Nicole Boyson of Northeastern University’s D’Amore McKim School of Business, based in Boston, debunked the received wisdom of the HFR numbers and came to some other intriguing conclusions. Their study, commissioned by PAAMCO CEO Buchan, looked at the performance of 9,520 hedge funds where the sex of the portfolio managers was known, over the period of 1994 to 2013. The sample was overwhelmingly male: Fully 95.4 percent of the funds had only male portfolio managers. Just 244 funds, or 2.6 percent of those surveyed, had women-only managers; the remainder were mixed.

By stripping out the survivorship bias inherent in a comparison of the HFR indexes, Aggarwal and Boyson found no significant difference in performance between the genders. But the professors also found that female-only funds were smaller than their male counterparts. Assets under management of extant funds with only female portfolio managers averaged $151 million, compared with $222 million for male-managed funds; women-run funds that failed had $95 million, on average, compared with $117 million for their male equivalents. And the performance of the surviving funds? Women-­managed funds that survived generated average annual returns of nearly 7.5 percent, compared with 6.7 percent for funds run by men. “Our results suggest that there are no inherent differences in skill between female and male managers, but that only the best performing female managers manage to survive,” the professors wrote.

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