Women remain a rarity among mutual fund managers, and gender bias may be one cause for this. A new study has found that female fund managers get around 10 per cent less fund flows than their male peers from investors preferring to invest in male-managed funds.
Less than one in 10 fund managers in the US is female - a low proportion that has remained flat for decades. Explanations abound for the dearth of women in the financial industry, as studies have shown hiring discrimination, self-selection into other careers and, often, a sexist environment.
The new study “Sex matters: Gender bias in the mutual fund industry” from the University of Mannheim proposes a new reason. Researchers Alexandra Niessen-Ruenzi and Stefan Ruenzi found that funds managed by women attracted much less cash - despite performing the same:
There are no gender differences in performance. Thus, rational statistical discrimination is unlikely to explain the fund flow effect.
The study used field data from all single-managed US equity mutual funds between 1992 and 2009 and compared the money inflow of female-managed funds to that of male-managed funds.
Female-managed funds received up to 10 per cent less cash, and the researchers argue that lower fund flows at least partly explain the lack of women in the industry:
As managers generating low inflows are not attractive for fund companies to hire, our results also provide a possible new explanation for the low fraction of female managers in the mutual fund industry based on customer-driven discrimination.
Investors may be missing out by avoiding women-led funds, however. Earlier this year, Meredith Jones found that men were outperformed as women-led hedge funds delivered better results.
Gender bias isn’t the only instance of discrimination against minorities in the sector. The Ruenzis’ study follows on a report that fund managers with “foreign-sounding names” attracted up to 10 per cent less fund flows than peers whose performance was the same, but names were American.