There were 7,693 mutual funds in February 2012, according to the Investment Company Institute. They range from long only equity and bond funds to alternative long/short mutual funds.

So how do some of these funds make a name for themselves in the $12 trillion industry?

Enter women-managed mutual funds. Some of these offerings bet on domestic and international equities but with a twist: The target companies make it their business to promote gender equality in the workplace. And while they basically do the same things male-run funds do, research points to women portfolio managers as independent thinkers and long-term investors who can add value for advisors and their clients.

Finding Alpha in Gender Equality

Joe Keefe, president and chief executive officer of Pax World Mutual Funds, revealed in the Women in Fund Management report published in June 2009 by the National Council for Research on Women, that by design three of Pax's six U.S.-based portfolio managers are women. According to Keefe, Pax has found that women give careful attention to risk, focus on the long term and often ask more penetrating questions than men in building their analyses.

In fact, Keefe in early January appointed Ivka Kalus-Bystricky to be lead portfolio manager of the Pax World Global Women's Equality Fund in addition to her role as portfolio manager of the $34.6 million Pax World International Fund. The firm touts the fund as "the only mutual fund in America that is focused on investing in companies around the world that are global leaders in promoting gender equality and women's empowerment in the workplace and beyond."

Kalus-Bystricky said the fund's top three holdings, which include Statoil ASA ADS, a Norwegian-based energy company, BlackRock and London-based international telecom concern Vodafone, all are on the forefront of gender equality in terms of promoting women into leadership positions.

"It's a non-correlated source of alpha so across regions and sectors the goal is to invest in companies that promote women in management and leadership relative to their peers because we have so much research that leads to better financial results in terms of higher earnings and less volatility," she said.

Portsmouth, N.H.-based Pax World purchased the fund in October 2007 from San Francisco, Calif.-based FEMMX Financial Company, whose president, Linda Pei died of liver cancer in December 2007. Kalus-Bystricky said she hasn't received any negative feedback towards her as a woman portfolio manager. "In a way, it could be a benefit coming into some of the larger groups where they're used to having guys in black suits. It's nice to have a different perspective to present to them," she said.

Kalus-Bystricky said it's a shame that the industry is still underrepresented with women, because there are differences in management styles between men and women. "The gap between wealthy women and women managing that wealth seems like it is poised to change. I would hope to see a lot more women portfolio managers reacting to that need."

Nearly 1.2 million women are top wealth holders, comprising some 43% of Americans with gross assets of $1.5 million or more, according to the Internal Revenue Service.

No Love For Women-Owned Fund Shops

The gender gap is a wide one in the world of investment management, according to the Women in Fund Management report. Women manage only 3% of the assets in the hedge fund industry, and only 10% of mutual fund managers are women, a figure that has barely budged over the past decade despite increasing numbers of women with degrees in finance and women certified as financial advisors.

Based on anecdotal evidence and a survey of academic research, the report concludes women fund managers take a more long-term, measured approach to risk, are more detail-oriented researchers, and are less likely to succumb to groupthink than the traditional male manager. "When you look at the narrowness of the demographic that got us into the current financial crisis and is charged with getting us out of it," said Linda Basch, NCRW president, "it becomes clear how much we need the talents that women leaders can bring to the table."

Researchers Alexandra Niessen and Stefan Ruenzi from the University of Mannheim, Germany, point to investor prejudice against women in finance as one potential explanation for the low number of women in the U.S. mutual fund industry. "Our empirical and experimental results show that female-managed funds experience lower inflows than male-managed funds," they wrote, in a research paper.

They concluded that their finding cannot "be explained by rational statistical discrimination: female fund managers follow more persistent investment styles than male fund managers, and performances are virtually identical."

Bucking the Trend

Diane Garnick, a former investment strategist at Invesco Ltd. and former global investment strategist at State Street Global Advisors, is looking to change the trend lines in her favor. In January, she launched New York-based registered investment advisor Clear Alternatives LLC to understand and meet the needs of female investors. She founded the firm with Ashlye A. Stewart, portfolio manager, and Florina Klingbaum, chief financial officer, and is expected to boost her staff to 12 by the end of this year.

"Everyday, we're interviewing more ladies. Our goal is to have 75% or more of company shares owned by women and to have 75% or more of the company employed by women," she said.

Her ongoing mission includes supporting the next generation of women in terms of increasing their investment intellect because she thinks that it generally takes women longer to get their advance degrees. To that end, Garnick said she is trying to get potential plan sponsor clients to sponsor summer internships for female scholars from New York City's Baruch College whereby the scholars would be involved in a project solely for the pension client to be presented to its board by the end of the program.

SourceMedia, the publisher of Financial Planning, has its own professional network for women: the Women Advisors Forum. The next forum is set for April 26 at the Metropolitan Club in New York. For more information, visit

Hung Tran writes for Money Management Executive.



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