Fortunately, the worldthat Seven Investment Management (7IM) founder Justin Urquhart-Stewart remembers has moved on quite a bit since then.
He said the Big Bang – which ushered in the deregulation of the stock market, including the abolition of fixed commission charges – might not have led to legions of women entering the sector, but what it did signal was a shift towards meritocracy as opposed to entitlement.
Change has continued, albeit gradually.
So where are the female fund managers?
According to a report by Morningstar, 13 per cent of fund managers in the UK are women, the same ratio as 2008 during the global financial crisis.
Although the UK fares better than the US and Germany, where women fund managers account for 10 per cent and 9 per cent, respectively, women are better represented in countries such as Singapore, Spain and Hong Kong.
The report also showed that women have better odds of running funds in areas of industry growth: passive, funds- of-funds and team-managed funds.
Likewise, it appears more difficult for women to win management roles in solo-managed funds and actively managed funds, which is a longer-established section of the mutual fund industry.
In some asset classes, women fund managers have more credentials than men, yet they are generally under-represented in fund portfolio manager ranks.
A CFA Institute study also found that women are under-represented in all of the most common CFA member occupations.
Additionally, women represented only one in 10 people in the key leadership positions of chief executive, chief investment officer, and chief financial officer.
The occupations with the highest representation of women are performance analyst, compliance analyst/officer, and relationship manager/account manager, but even in these occupations, women represent less than one in three workers.
Traditional posts
Mr Urquhart-Stewart said that although many women are confined to traditional areas such as HR and marketing, more are breaking into fund management.
When he set up 7IM more than 15 years ago, along with Tom Sheridan, he said they wanted to do things differently: “That’s why we did not want to join another firm. When we chose our chief investment officer, we chose her not because she was female, but because she had the right attitude towards people’s money, which was that it was a privilege to look after people’s money, not a right”.
Former city investor Bhavini Shah, who set up City Hive in 2016, said attitudes towards female fund managers by the ‘C-Suite’ are changing, and more importantly, by their clients. However, there is still a bottleneck with middle management.
City Hive works with firms to address gender imbalance issues and acts as a voice in those situations when women are reluctant to speak out because they fear rocking the boat with their employer.
Ms Shah spent 15 years in the asset management sector, working for Aviva Investors, Merchant Securities (now part of Sanlam UK), and HSBC, with extensive multi-asset multi-manager investment and governance experience as a portfolio manager.
A recent freedom of information request that City Hive group put to the Financial Conduct Authority on the gender split for investment managers found that in 2017, there were 27,957 men registered with the FCA as investment managers, compared with 5,294 women.
Ms Shah said: “Pressure from initiatives such as the Women in Finance charter, bad press from the Gender Pay Gap reporting; and the proven impact to the bottom line make the perfect storm for seeing impactful change.
“Now that attitudes have changed, it is time to take action. But this is more difficult, as there is no quick fix to this crisis. The talent pool just isn’t there, because it has never been nurtured.”
Moreover, investment consultants and fund buyers play a part in this debate.
She added: “Professional fund investors have always looked to diversify their portfolios via asset class; geography; currency; firm type; big versus boutique; team type; star manager versus team. So why not gender?
“More questions about diversity are appearing in due diligence questionnaires in the same way that questions began to creep in 10 years ago about ESG [environmental, social and governance]. However, if they are asking about diversity, they must also ensure their processes don’t automatically penalise a fund manager for going on maternity or paternity leave.”
The Morningstar report pointed to research from consulting firm Oliver Wyman, which suggested women find a lack of support mid-career, which could prompt them to exit the industry before they are named a portfolio manager.
City Hive currently runs a mentoring scheme called The City Stars Programme for those who work on the investment floor. It is a five-week professional development programme to support mid-career women.
It also helps corporates to retain talent in the middle of the pipeline, which is often lost when woman go on maternity leave.
Ms Shah added: “Female fund managers are sadly casualties of the same misconceptions as many other professional women, which is that being away on any sort of extended maternity leave means the job cannot be done. Well, this is just nonsense.
“There are many ways to ensure a fund is managed consistently for clients, even if someone is away for a short time. It is about being sensible and flexible.”
Gender diversity
The idea that gender-diverse teams have better outcomes in terms of corporate earnings and investment returns is the subject of a growing number of industry papers and even some new investment products. However, the CFA said academic findings have, to date, been mixed.
In its report, the CFA found that most of its women members (70 per cent) and nearly half of all CFA members (48 per cent) believed that mixed gender teams of investment professionals lead to better investment performance results because of more diverse viewpoints.
The report said: “The theory is that diversity matters because diverse groups of people bring different perspectives to problems, and thus better ways of solving them.
“With the complex problems faced in investment situations, groups can get stuck if they have limited diversity in which everyone thinks in the same way. Such difficulties are far less likely if the diversity is deep and derived from wider sources of knowledge, perspectives, experience, values and ways of thinking.”
Ellen Powley multi-manager income and growth portfolio manager at Hargreaves Lansdown, said her own experience in the industry was positive.
She said: “Diversity works better because you have more debates and more challenges, and that’s a large part of what the industry is about.”
Many firms have woken up to this realisation and are trying to tackle the issue.
Although Mr Urquhart-Stewart does not believe that being a good fund manager is dependant on gender, he believes that women have certain characteristics that men can learn from.
He said: “It is a difference in attitude. Throughout my career, the difference between male and female attitudes to investing is that women are not risk-averse, but they don’t want to take too much risk.
“They know they have to take risk, but they are much more managed in their risk-taking and under pressure, will pull back. But men are generally quite likely to double up, which is not what you want.”
These conversations about gender imbalance in the investment management sector are not new, but hopefully the momentum driving it could have agreater impact.
