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Give
Women Fund Managers a Fair Chance
Say you had a pile of money to invest, would you want
a woman or a man looking after it? If you picked a fund at random, chances are
it would have a man in charge of it. Yet if you picked one run by a woman, it
might perform better.
That's the claim of some who are starting funds for
women.
Nicola Horlick, 44, one of London's high-profile fund
managers, has just opened a division of her Bramdean Asset Management called
Bramdiva to manage money for wealthy women. She began the service with a punchy
round of artillery fire in the battle of the sexes.
Women are better than men at running funds because
they don't let their egos get in the way, she said at the launch of the fund
management service. 'Nicola has always believed that women can do a better job
of investment than men can,' said Neil Mainland, a spokesman for Ms Horlick. She
believes 'women are steadier in their approach, and less volatile', he said.
Ms Horlick isn't the only person pushing those views.
Merrill Lynch & Co published a survey this year that showed women were
better at investing than men.
Fewer mistakes
The Merrill poll covered 1,000 people - half women,
half men - and concluded that females made fewer mistakes than males in
financial markets. They were less likely to hold a bad investment for too long
and to commit too much money to a single risky idea. And they were less likely
to wildly churn their investments.
'Men tend to make what we call the 'glamorous'
mistakes, like riding winners down, holding on to losers, buying on a tip or
putting too much money in a single investment,' said Hannah Grove, chief
marketing officer of Merrill Lynch Investment Managers, in a statement on the
results.
'These mistakes may make for interesting
cocktail-party conversation, but in the greater scheme of things, it's the
bigger, systemic failures like ignoring their asset allocation that do the
greatest damage to investors' portfolios,' she said.
The UK financial website Digital Look surveyed 100,000
portfolios and found that the ones run by women rose 17 per cent in the year to
May, compared with an 11 per cent advance for those managed by men.
'Overconfidence and overtrading lead to a much worse
investment performance,' said Tim Price, senior investment strategist at
London-based Ansbacher & Co. 'That is classic alpha-male,
testosterone-fuelled behaviour.'
The logical conclusion is that men should be cleared
off the trading floors. Hedge funds should be installing day nurseries.
Investment banks should be redecorating their offices in some nice pastel
shades. The men have been in charge of the money for long enough. It's time to
give the women a chance.
It may not be that simple. The markets are competitive
and ruthless. If women were better at investing than men, wouldn't more of them
be running the big funds?
Subtle truth
Gender discrimination may be one reason. Yet it is
also possible that the truth is more subtle than someone such as Ms Horlick
makes out. While a 'feminine' touch may well be the key to putting together a
winning portfolio, it probably doesn't matter much whether such an approach
appears in the office in trousers or a skirt. For example, someone such as
Warren Buffett, 75, the billionaire who runs Berkshire Hathaway Inc, would
appear to embody many feminine values: He invests for the long term, he doesn't
churn and he buys what he knows. Except, he's a man.
Likewise, someone such as the high-profile
London-based financier Robin Saunders, 43, seems to embody many male values: She
makes big, high-risk plays and uses lots of leverage. Except, she's a woman.
Too much 'alpha-male' behaviour is damaging for
investors and companies. You shouldn't trade too much because the gains won't
recoup the fees. You should research investments because just having hunches
isn't good enough. And it is better to admit your mistakes earlier - blind faith
in your own judgment is a good way to get poor quickly.
But whether it's men or women who are trading on too
much testosterone doesn't really matter. It's the values that count, not the sex
of the person who embodies them. - 15 Nov 2005 Bloomberg
Matthew Lynn is
a Bloomberg News columnist. The opinions expressed are his own.
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