Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Zero progress for funds management women
On a day of celebration for the late Mavis Robertson’s achievements in the advancement of women in the super industry, along with her many other achievements, today (March 2), Morningstar is publishing a report on the progress of gender diversity in the industry over the past 20 years. In a nutshell: it’s zero progress.
The Morningstar report published today says that, when it comes to gender diversity, the global funds industry looks much like it did 20 years ago: at the end of 2000, 14 per cent of fund managers were women; at the end of 2019, 14 per cent of fund managers were women.
“There are geographic bright spots, mostly in smaller markets, including Hong Kong, Singapore, and Spain, where more than 20 per cent of fund managers are women. However, some of the largest financial centres remain below the global average, including the UK (13 per cent) and the US (11 per cent),” the report says.
Morningstar’s UK team encapsulated the imbalance with the headline: “More Funds Run by Daves Than Women”. That is, there were 108 UK funds run by managers named David or Dave in Morningstar Direct-and only 105 funds run by women of any name.
Women in Super (WIS), the organisation established by Mavis Robertson in 1994, will hold an annual ‘Mavis Robertson International Women’s Day’ lunch in Sydney today, ahead of the ‘Mothers’ Day Classic’ charity run/walk on Mothers’ Day, May 10, which raises substantial sums for breast and prostate cancer research. Other lunches this week are being held in Melbourne, Brisbane and Adelaide.
Mavis was a foundation trustee of the Allied Unions Superannuation Trust, which went on to become Cbus, of which she was its general secretary for a time. She was also the co-founder, with Garry Weaven, of CMSF, which spawned AIST, of which she became secretary, and a foundation committee member of ACSI, a foundation director of Industry Fund Services, and an inaugural director of SuperPartners, which is now owned by Link Group. But her passions and work extended beyond superannuation. She spent many years fighting for causes such as the rights of women and indigenous people, peace and disarmament and the elimination of discrimination. She was a prominent activist in the Vietnam War protests, and in the early 1980s was responsible for setting up the Nuclear Disarmament Coordinating Committee dedicated to rallying the people of Sydney around nuclear disarmament.
The Morningstar report, presented by Laura Lallos, the managing editor of Morningstar Magazine and a senior mutual funds analyst, is an update of earlier work in 2016 by the research and analytics firm. The gender gap is a chasm in the fund industry, the report says. The cause is likely a complicated combination of structural barriers and implicit biases. But it has nothing to do with ability. Morningstar’s Madison Sargis and colleague Kathryn Wing, of the quant team, demonstrated in a 2018 study showing that the gender of fund managers doesn’t affect investment performance.
“Meanwhile,” the report says, “a growing body of research suggests that the presence of women on corporate boards and in the ‘C-suite’ is linked to superior financial performance… That may be one reason that fund companies themselves are pushing for diversity at the companies they invest in.”
The report also notes that the drive to diversify boards means that qualified women are in high demand. Executives feed the pool from a relatively small group of women who meet traditional standards. Women directors are, on average, on more boards than men. While the report doesn’t say this, it is an increasing gripe among qualified men that they do not get a fair run at boards because of the trend to greater gender diversity. They say that the system has become discriminatory in the opposite direction and against skills or knowledge-based selections.
– G.B.
