September 21, 2019

For Women Hedge Fund Managers, Luck Be a Lady

Lady Liberty on a 20th century gold coin

Women are assuming an increased role in managing hedge funds.

According to James Brown, it’s a man’s man’s man’s world. He certainly was right regarding the management of hedge funds. Much like the financial industry in general, it can feel like an all-boys club. Lisa Du at sheds some light on women who are making waves – and doing better than their male competition. To quote the songwriter, Frank Loesser, for women hedge fund managers, Luck Be a Lady.

This isn’t new – as of last year, the number of working women had surpassed those of men.
Yet in the hedge fund world, that precedent is still light years away. According to Hedge Fund Research, women only manage about 3% of the $1.6 trillion invested in hedge funds.

That should change soon — it’s been statistically proven that women make better alternative investment fund managers than men. A Hedge Fund Research study showed that female-run funds lost less money during the financial crisis (that can be attributed to women taking less risk). Portfolios overseen by a women also generated better returns over three to five year periods studied. In addition, the number of female traders is growing. Spread betting provider City Index (CI) says the men:women ratio of their clients is now 10:1. In 2001 it was only 56:1. That boost in female firepower at the trader level could mean more females entering the hedge fund industry or starting their own.

But, this is also an industry where it has basically been scientifically proven that men will raise more money to manage than women. A Washington University in St. Louis study in 2010 found that people were willing to invest three-times as much money in a fund run by a male rather than one overseen by a female.

So who are these female titans that are daring to stand among men and make waves? Two include Renee Haugerud and Geraldine Sundstrom. Based in New York, Haugerud founded of Galtere Ltd. in 1998. Her fund has a 12.5% annual return since 1999. Starting with $5 million, her fund currently has $1 billion AUM, or assets under management. She uses a global macro strategy which she probably gained from working as a commodities trader. Haugerud grew up in a rural town in Minnesota, where she used to serve meals to jail inmates because her dad was the town sheriff.

Sundstrom joined the London-based Brevan Howard as a portfolio manager in 2007. Her fund has a 12.5% annual return since 1999. She manages $2.5 billion and employs a global macro strategy. She uses a global macro strategy focusing on emerging markets. Sundstrom was previously a banker at Citi, but has been in investment management for a while. Of note: her fund generated positive returns in 2008 despite market volatility and the financial crisis.

The article lists some more portfolio managers at large hedge fund firms and managers of their own funds. In today’s world, it’s politically incorrect to say one gender can do a job better than another. Yet studies are show managers are not only capable but are outdoing their male peers. If you’re looking for more conservatism, a woman manager may be a good pick. Bottom line: for women hedge fund managers, Luck Be a Lady.

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