The picture isn’t getting any brighter for women in asset management.
Despite widespread focus on the importance of diversity, the share of women running U.S. funds overseeing trillions of dollars has slid over the last two decades, according to a Morningstar analysis released Monday. Even passive funds, a booming area of money management that was once a hot-spot for female talent, have seen the percentage of women managers drop. Looking globally, progress has stagnated — at 14%, women’s share is the same as in 2000.
Long-time obstacles, such as the limited pipeline of seasoned female candidates and the many years of experience required to achieve fund-manager status, have impeded women’s advancement. Customers may be the biggest losers from this: Previous Morningstar analysis showed that bond funds run by women outperformed those helmed by men from 2003 to 2017.
“Even given all the focus there’s been in the industry on increasing diversity, given the benefits it’s produced, we haven’t seen that pan out in the overall numbers of women portfolio managers,” said Madison Sargis, director of quantitative research at Morningstar.
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Sargis and her colleagues analyzed prospectuses of funds spanning 56 countries, including more than 10,000 in the U.S. The study encompassed a global pool of 25,000 managers, a tally that has doubled since 2000. They looked at mutual funds and ETFs focused on fixed-income and equities, as well as allocation funds — such as target-date retirement accounts.
There were bright spots in the study. Some smaller markets bucked the trend of global stagnation. In Hong Kong, Singapore and Spain, more than 20% of fund managers were women. But the percentage in the U.K. and U.S. were both below the worldwide average, at 13% and 11%, respectively.
The challenge is multifaceted. The number of women entering the industry has held fairly constant in recent years, even amid efforts to draw them into the field, according to Sargis. So as the industry expands, men are gaining ground in relative terms. That also means that the pool of female candidates to manage funds remains comparatively small, especially considering that it could take 15 to 20 years of experience to acquire the skills to oversee a fund, Sargis said.
And while women have gained traction in certain new market sectors, their sway hasn’t lasted. One glaring example from Morningstar’s data is in passive funds. Women initially made solid inroads in the field, especially in exchange-traded funds, only to see their relative position decline.
“There are structural barriers along the way that have made it more difficult for women to reach that prized position of portfolio manager,” said Jackie Cook, director of sustainability stewardship at Morningstar. “There may be some biases toward women when it comes to managing larger amounts of money.”
This backdrop means that progress in resolving the gender gap in asset management may come at a glacial pace, even as various initiatives lead more young women to study finance, and as companies strive for more diverse workforces.
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Morgan Stanley hired Seema Hingorani last year as a managing director at its more than $500 billion asset management unit. She founded a non-profit called Girls Who Invest, which runs a program designed to increase gender diversity in the industry.
Morningstar’s findings were echoed in a Goldman Sachs analysis last year. The bank’s study of 528 large-cap mutual funds showed 77% had all-male portfolio management teams. However, since the start of 2017, 39% of female-managed funds have outperformed benchmarks annually, compared with 41% for all other funds, they found.
Sargis is still hopeful and says she’s on a mission to bring attention to the issue and work toward strengthening women’s standing in the industry.
“The data is definitely disheartening,” she said. “But we’ll keep researching it, talking about it and making the topic front and center to shine a light on it until we see a better share of women in this industry.” — Additional reporting by Susanne Barton
