Morningstar began formally studying fund managers by gender in 2015 after observing first-hand over decades that women are underrepresented in the fund industry. We studied the rates of women managers in three countries, the United States, Spain, and Hong Kong, and found that women are vastly outnumbered by men in fund-management ranks not only in absolute terms but also relative to other professional industries, including law and medicine.
In this latest look at fund managers by gender, we harnessed Morningstar’s global database of mutual funds and their managers to consider fund managers across 56 countries, and the trends we saw in the U.S., Spain, and Hong Kong are repeated globally: Women are not often tapped to manage mutual funds, regardless of geography. Globally, about one in five fund managers is a woman, and that management rate is largely unchanged since 2008. These numbers suggest that the fund industry as a whole is not becoming more gender-inclusive.
Taking a deeper look at the data, we found there are geographic bright spots in the industry. Women have been named fund managers at a relatively higher rate in places such as Hong Kong, Singapore, France, Spain, and Israel. At least 20% of fund managers are women in these markets. But elsewhere, women are behind the global norm. In larger financial centers, such as Brazil, India, Germany, and the United States, the local rate of women-managed funds is below the global standard.
Intuitively, if there are geographic environments that are more conducive to women portfolio managers, it stands to reason that opportunities for women also may vary by fund attribute. Our study found this to be true. The aggregate data on women fund managers shows they are broadly underrepresented in the industry, but, within smaller portions of the industry, women’s representation has been uneven. For example, in the U.S., where 10% of fund managers are women, one might expect that 10% of all passive-fund managers are women, 10% of active-fund managers are women, and so forth. In fact, our study found that women are better represented in some areas of the industry than others. For example, women have better odds of managing passive funds than active funds.
To study women fund managers, we considered 26,340 managers of funds registered in 56 countries, all of which are included in Morningstar’s global database, making this study the most comprehensive of its kind. Morningstar indicated the gender of 15,996 of those managers primarily through information supplied to Morningstar by those managers’ employers. For the remaining 10,344 managers, we identified each manager’s gender by examining his or her first name. We ran those first names through an algorithm that assigns the probability of being a woman based on local census data. When the algorithm assigned more than 50% probability that the first name is female, we assumed the manager is a woman.
To audit the results, we manually verified managers’ gender in cases where Morningstar’s gender data did not match the algorithm’s gender probability. We did the same for managers with gender-neutral first names, and in regions where the algorithm may not be sufficiently sensitive to local naming conventions. For example, in France, Patrice is more often a man’s name, while in the U.S., Patrice skews feminine. To manually verify gender, we looked to professional photos, biographical descriptions, and titles and pronouns such as Mr., Mrs., Ms., he, she, his, or her. However, we were not able to include all countries. We did not include countries where first names are locally reflected by characters but then are translated into letters for storage in Morningstar’s database or countries where first names typically are not associated with a specific gender. As such, we excluded China, Japan, and Taiwan from the study.
Once we determined each manager’s gender, we began looking at the managers assigned to mutual funds and exchange-traded funds by listed domicile. Some funds, such as Templeton Global Bond, are domiciled in multiple countries, so these managers and their funds were included multiple times in the study. That said, each country’s data reflects the funds–and managers–registered in that market. It is also worth noting that Morningstar’s manager data is more complete in some countries than others. In the United States, public documents reflecting fund managers’ names are widely available and changes are reflected quickly in Morningstar’s database. Not all markets are as transparent, however. There may be cases where the management information on a given fund is outdated. Even so, the broad trends hold true: Women are underrepresented in fund-management ranks globally.
Here’s the structure of this paper:
- We first review descriptive data on women in professional industries globally. The findings underscore an absolute and relative gender disparity in the fund industry.
- Next, we provide a brief explanation of how our 2016 results can be interpreted, and then we discuss the key takeaways of the modeling exercise.
- Following the takeaways, we conclude the paper with some general observations and areas requiring further research.
- The last section, the Appendix, details the data used for the analysis, describes the model, provides the data tables, lists our references, and concludes with acknowledgements.
Women in Professional Industries by Country
Our analysis of fund managers by gender found a significant disparity in the percentage of women managers by country. Women are best represented in percentage terms in smaller markets for the traditional mutual fund industry, including Singapore, Portugal, Spain, Hong Kong, and France. In larger markets, such as Australia/New Zealand, Canada, Great Britain, Luxembourg, and the Netherlands, the percentage of women fund managers ranges from 11% to 14%. The U.S. and Germany have the worst inclusion rates among larger markets, where women fund managers are 10% and 9%, respectively. Furthermore, their rates are down from highs in 2008 when, respectively, 11% and 12% of fund managers were women. This is a downward trend we saw generally across larger markets.
Women fund managers are underrepresented relative to other professions that require similar education, including lawyers and doctors. In all cases where data is available, women make up a lower percentage of fund managers than lawyers and doctors. In France, for example, women are 21% of managers named to registered funds, while women are more than half of that nation’s lawyers and 43% of France’s doctors. In the U.S., the rate of women funds managers is lower than that in France at 10%, and the rate of women lawyers and doctors also is lower at 36% and 33%, respectively. Comparing fund managers with doctors and lawyers is somewhat misleading as doctors and lawyers are credentialed upon completing their education and meeting certification standards, whereas a fund-management role is a leadership position typically achieved later in one’s career.
The broader data on professional women suggests that some countries have done a better job of fostering women’s professional careers, both inside and outside of the fund industry. The data also suggests that there are biases that prevent professional women from being more successful in countries such as Australia/New Zealand, the United States, Germany, Brazil, India, and Poland. In these countries, we saw there are higher rates of women CFA charterholders than women fund managers. Furthermore, the CFA Institute reported 49% of women primarily take the CFA exams for career advancement or to improve chances of obtaining a job, compared with only 45% of men. While only a 4% difference, it stands to reason there are differing viewpoints by gender on the qualifications needed to secure a desired position in the financial industry. Taken together, it appears to be more difficult–or less appealing–for women to manage funds in countries where the industry is more-established and men have long dominated leadership roles.
Women Fund Managers
Our study looked initially at where women are managing funds by geography. From there, the goal of our modeling exercise was to determine if certain characteristics are more prevalent among women fund managers relative to men fund managers. To begin, we defined our dependent variable to be the manager’s gender and then we deployed a logistic regression to our data. Our technique allowed us to measure gender among each independent variable, so our model told us the change in odds of the manager being a woman for a typical, one-unit increase in each variable. We controlled for factors such as region, fund age, and manager age so we could be certain that our results were not swayed because of regulatory regimes or because opportunities are skewed based on the fund’s age or the tenure of a manager.
Let us take an example: Consider two equity funds, Fund A and Fund B. They have the exact same characteristics, and we do not know the manager’s gender. We expect each fund to have the same relative odds of having a woman manager: 50% or 1:1. Being a man or being a woman is equally likely.
Now suppose we gather additional information and find out that Fund B has a socially responsible investing mandate while Fund A does not. For argument’s sake, let us say that we had observed that every other fund with a SRI mandate had a woman fund manager. In this case, we might reasonably expect that there is a higher likelihood that this new Fund B is managed by a woman. As a result, we would change our expectation, surmising that Fund B has higher odds of being managed by a woman than Fund A.
Conceptually, this is what the logistic regression accomplishes. Using our data, we find that SRI funds are more often managed by women historically, holding constant the effect of other forces. We expect this effect to increase the odds of a woman fund manager by 24%.
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