Why The Gender And Diversity Gap In Asset Management?

Within the asset management sector, traction in gender diversity is painfully slow – not just in South Africa, but worldwide.

The Citywire 2021 Alpha Female Report reported a glacial pace, claiming it will take about 127 years for the global asset management industry to hit parity.

The report also found that women make up a global average of only 11% of portfolio managers – despite the proven success of women fund managers. Research by Morningstar to measure this success found no significant performance difference between male and female fund managers indicating that performance trends do not explain the lack of diversity in the industry.

Broadly, men outnumber women three to one when it comes to investment decision making and there continues to be a remarkable lack of diversity when it comes to who is actually managing the money.

But what is going on here? Some of this undoubtedly comes down to the fact that the dearth of visible female fund managers means fewer women consider this career: ‘you can’t be what you can’t see’, as the saying goes.

However, there is another argument that something even more insidious is at play. In elite careers like fund management, there is a pervasive idea that top performers are intellectually brilliant (and indeed most of them probably are). Meanwhile numerous studies have uncovered what psychologists call the ‘brilliance bias’, in which people overwhelmingly ascribe genius or brilliance as a male trait. This is despite the fact girls and women today consistently outperform boys and men at school and in higher education.

As Caroline Criado Perez wrote in her book Invisible Women: Exposing Data Bias in a World Designed for Men: “We have written so many female geniuses out of history, they just don’t come to mind as easily. The result is when ‘brilliance’ is considered a requirement for a job, what is really meant is [you must be male]”.

Looking at South Africa specifically, Citywire SA commented that there has been alarming stagnation: in 2019, 10.6% of the local fund managers in Citywire’s database were women. That rose marginally to 10.8% in 2020 before dropping back to 10.7% in 2021.

One encouraging sign is however a growing acceptance that diverse investment teams deliver better results, and the Citywire SA report shows mixed teams have better risk-adjusted returns and lower drawdowns.

I am no behavioural psychologist but by bringing an array of voices to the table, people will naturally challenge each other and those from different backgrounds bring alternative perspectives. The diversity debate is particularly vital in South Africa, given its long history of financial exclusion.

The investment ‘support sector’

Interestingly, while asset managers are busy working at diversity, equality and inclusion (DE&I), the investment support sector – where jobs are equally intellectually demanding – is generally better rated on the gender diversity scale.

As a global fund services provider, Maitland has made significant strides towards overcoming the brilliance bias and championing diversity. In South Africa, Maitland is a Level 1 B-BBEE contributor and 80% of our staff are non-white, with the majority being African. On gender diversity, more than half of our staff are women, including at the highest levels where half of our leadership team are women. As a result, our business is thriving. Client satisfaction the highest it has ever been, operational performance is consistently growing, and our workforce largely works from home by choice.

While we are certainly not the odd one out when it comes to championing and benefitting from DE&I, we believe we remain in the minority. I encourage the asset management sector to take significant steps to flip the status quo. Together, we can inspire brilliant young women, our future pioneers and leaders, to innovate and grow our industry.