Where Are the Women in Alternative Investing?

According to a recent survey, only 19 percent of employees in the alts industry are women, and most are in junior roles. It’s past time to change that.

(Akio Kon/Bloomberg)

(Akio Kon/Bloomberg)

One of the few great things about being the child of divorced parents was that I usually got two Christmases. That meant two lists for Santa, treat-filled stockings hung by multiple chimneys with care, and at least two opportunities for paper-ripping orgies of consumerism.

Most years my mom “won” Christmas with a home-court advantage of primary custody. However, in 1978 my dad handily took the “best gift ever” prize with what was to be one of my most cherished possessions for the next 12 months: My very own, officially licensed Wonder Woman Underoos.

I loved those damn drawers. There is even an iconic family photo of my older sister and me posing, wrists crossed a la Diana Prince, before the Christmas tree that year. Periodically, one of us still posts that snapshot on Facebook to humiliate the other. It’s always a crowd favorite.

So imagine my delight when, trapped on a transatlantic flight recently, I finally had time to watch the latest cinematic Wonder Woman offering. Time all but stopped, and for a minute I was transported back to the idyllic days of my childhood. A time when it was “safe” to drink from the water hose and the U.S. was facing the threat of nuclear war from only one country.

Then I turned on my Wi-Fi, saw the latest research from Preqin on women in the alternative investment industry, and my invisible jet crashed back to earth. I didn’t need a magic rope to see the truth in Preqin’s figures, but that doesn’t mean I was happy about them.


You see, according to Preqin’s survey of 200,000 people at alternative investment management firms worldwide, only 19 percent of employees in the alts industry are women. Of those women employed in the industry, most are junior, ranging from 26 to 36 percent across private equity, hedge funds, venture capital, infrastructure, real estate, private debt, and natural resources. Sadly, on average women only make up 11 percent of senior employees in the industry. And when you look at the women in investing positions and in board member roles, the numbers are even starker, ranging from a low of 3.9 percent to a high of 18 percent, depending on position and type of assets managed.

Figures this low, particularly after years of sustained attention on the issue, are frankly shocking. I mean, women began outnumbering men on college campuses in 1988. They started earning a third of law degrees and medical degrees in 1980 and 1990, respectively. Women started earning more undergraduate business degrees than men in 2002. Women controlled more than 50 percent of the investable wealth in the U.S. by 2012. They control 48 percent of estates worth $5 million or more. Ninety percent of women will be solely responsible for their own or their families’ finances at some point in their lives. Women own 36 percent of all businesses, according to Small Business Administration data. Highly educated women with financial acumen are now the rule, not the exception.

So where are the women in alternative investing? The most optimistic conclusion to draw from the Preqin study is that, over time, the numbers of female senior alternative investment professionals will swell as the junior ranks mature in their jobs. But if we don’t begin to see more seismic movement in these percentages in the near future, I think we all have to ask ourselves some tough questions.

For example: What efforts do we make in recruitment to ensure a pool of gender-diverse candidates? What are we potentially losing out on (enhanced returns or firm profitability, reduced portfolio and market risk, fewer and shorter drawdowns) if we don’t expand the talent pool to be more inclusive of 51 percent of the population? What unconscious biases do we continue to harbor, either as individuals or as organizations, if these numbers stubbornly refuse to budge? What role do limited partners have in ensuring a more diverse alternative investment industry, given that a growing body of research shows diversity is in an investor’s best interests? What more do women in the industry need to do to be role models, mentors, and sponsors of future talent? How will the industry serve an increasingly powerful female financial force that it seems to persistently refuse to embrace?

To be clear, no woman I know is asking for special treatment when it comes to hiring of any kind (employment at an asset management firm or in a fund allocation role). The women I speak with all want to earn their place in the alternative investment management industry and are willing to get scrappy when required — and they’re posting the numbers to prove it.

Women-run hedge funds have produced returns double those run by their male peers this year, and on a rolling 12-month and rolling 60-month basis through mid-October, per Hedge Fund Research. The National Association of Investment Companies released a white paper in October showing that diverse private equity firms tend to outperform. And analysis by Scandinavian bank Nordea found that companies where a woman was either CEO or chair at the end of the year more than doubled the performance of the MSCI World Index in the following year. With numbers like these, the only real wonder is why there aren’t more women in alternative investing already.