OUTNUMBERED BUT NOT OUTPACED: THE BOLD CHANGE WE NEED FOR FEMALE FUND MANAGER TALENT TO BREAK THROUGH

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Outnumbered but not outpaced: the bold change we need for female fund manager talent to break through

OUTNUMBERED BUT NOT OUTPACED: THE BOLD CHANGE WE NEED FOR FEMALE FUND MANAGER TALENT TO BREAK THROUGH8 MARCH 2017

In recent years, financial services has transformed its approach to diversity. Columbia Threadneedle Investment’s Natasha Ebtehadj, manager of the Threadneedle India Fund, joined the firm in 2008 and has seen the shift in the industry first hand. “Across the City, the old boys’ network has been broken down, so there is a lot less of that and more chance of progressing. We’ve evolved from the fund management of long lunches on a Friday afternoon – that just doesn’t happen anymore,” she says.

It is now widely acknowledged that companies need diversity to effectively serve their customer base and avoid risky groupthink. At a time when individual investors face increasing challenges, the industry needs a broad mix of experience, ideas and opinions to help meet them.

But despite the focus on diversity initiatives, fund management has remained stubbornly immune to gender balance. Research conducted by Citywire in May 2016 found that only 7% of funds worldwide are managed by women, accounting for just 4% of assets.1

1 Citywire Smart Alpha. Alpha Female. May 2016

The theme of this year’s International Women’s Day is “Be bold for change.” While financial services has made some progress towards parity, fund management remains an outlier with only 7% female representation. It’s time to embrace bold change to redress the balance.

Alison Jefferis Head of Corporate Affairs, Columbia Threadneedle Investments

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Outnumbered but not outpaced: the bold change we need for female fund manager talent to break through

A DIFFERENT APPROACHThe industry is missing out on a deep pool of talent and resources. Evidence (admittedly limited due to the tiny sample size) shows that characteristics of female brains may in fact make them particularly well-equipped to be fund managers.

For example, women are less prone to excessive risk-taking when markets are surging and less susceptible to stress-induced risk aversion when markets take a turn for the worse.2 Ann Steele, manager of the Threadneedle Pan European fund, has witnessed this in her decades of experience in fund management. “Women definitely have a different attitude to risk – we are very unlikely to put everything on the red square. I think women have a much more balanced cocktail of equities in their funds and are more patient in growing them, they can take a longer-term perspective.”

Brain studies have also shown that women perform particularly well at big picture and situational thinking. It is not difficult to see how these skills would be highly beneficial to a fund manager tasked with translating geo-political and macro-economic trends into individual stocks. Equally, a major part of the role involves meeting and engaging with business-owners, at which point ‘soft’ skills, such as listening and collaboration, come into their own.

TACKLING THE DIVERSITY DEFICITWomen’s networks, mentoring and sponsoring will all play a vital role in building a strong pipeline of talent to ultimately promote the younger women entering the industry today in years to come. The Women in Finance Charter, launched in 2016 by HM Treasury, is gathering an increasing number of signatories. Columbia Threadneedle Investments was proud to be the first asset manager to sign it.

However, we recognise that we must take more steps to address the imbalance. At Columbia Threadneedle Investments, 29% of our investment professionals in EMEA are women, including four out of 14 senior desk heads. We were the first asset manager to publicly disclose our gender diversity data in 2015 and have set target ranges for female representation across the business.

Targets are an important statement of intent and provide a tangible, accountable goal to work towards, but we believe they must be accompanied by cultural and behavioural change to be effective in the long-term. We offer unconscious bias training to try and shift mind sets. Our recruitment process encourages candidate shortlists with appropriate female representation, which will help to ensure that qualified women are getting through to interview.

2 The truth behind testosterone: why men risk it all. Wired. 27 January 2013.

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Outnumbered but not outpaced: the bold change we need for female fund manager talent to break through

We support flexible working arrangements to ensure that careers can be balanced with family life, and thus mitigate the drop-off of women that can occur after middle management. Fund management, contrary to expectations, is better disposed than many financial sector disciplines to flexible working, being less reliant on face time with colleagues. In sharp contrast to deal-led corporate work, for example, it does not command long periods of late nights in the office. Much of the work is based around stock picking and research, which, with today’s technology, can feasibly be done from anywhere. Equally, as a performance-led profession, it is explicitly meritocratic – the best managers can be easily identified and rewarded.

It is essential that we extol these benefits to younger women considering fund management as a career path, as well as articulating the cultural change that means it is no longer the exclusive domain of an ‘old boys’ network.’ These steps will help to produce the bold change needed to redress the balance, and supply the industry with the talent it needs to thrive in the future.

This article draws on research by Chris Wagstaff, Head of Pensions and Investment Education, Columbia Threadneedle Investments and Senior Visiting Fellow, Finance Faculty, Cass Business School.

Important information: The research and analysis included in this document has been produced by Columbia Threadneedle Investments. Any opinions expressed are made as at the date of publication but are subject to change without notice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed. Issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com Issued 03.17 | Valid to 03.18 | J26290

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