Female led hedge funds can gain in value

By Allison Nolan 

The hedge fund industry is dominated by men, with women and minorities controlling only a small fraction of U.S.-based assets.

Some financial observers say fixing this gender imbalance is long overdue. They bolster their argument with data showing hedge funds run by women have performed well in recent years, including during the pandemic, when they outperformed those managed by men.

Female-led hedge funds: Embracing diversity and inclusion   

“Embracing a culture of inclusion and diversity in an organization is not just the right thing to do,” says Allison Nolan (www.athena.ky), founder and managing director of Athena International Management Limited and author of the upcoming book, Madam Chair, about how women are transforming the hedge fund industry and why more women are needed.

“The benefits of gender balance within investment management firms are clear and irrefutable. Not only does gender diversity and inclusion within a firm improve decision-making and enhance the business culture, but evidence shows that it is sound business sense, creating value and improving returns.”

Studies reveal that part of the reason female investors fare well compared to men is due to behavioral differentiators, such as showing more discipline than men in investing decisions, being less overconfident and trading less, and focusing more on protecting investments from risk.

Nolan says investors increasingly demand that hedge fund firms demonstrate a commitment to diversity, equity, and inclusion. She suggests actions hedge fund firms can take to improve diversity and inclusion and enhance the industry:

Lead the culture. “Rather than having diversity as a matter for the HR department,” Nolan says, “the firm’s principals should treat diversity and inclusion as a strategic initiative and an imperative part of the overall business plan.

Senior management should set a clear intention, with D&I goals becoming part of the firm’s mission, fundamental values, and culture.”

Start early. Nolan says firms should, at the minimum, require a diverse slate of candidates to be considered when hiring for open positions.

“It is a great idea to start earlier on in the process and create college-level internships encouraging applications from minority groups,” she says. “Overall, make diversity an ingrained part of the hiring process, creating diversity goals as well as policies and procedures around the onboarding process.”

Identify unconscious bias: “Negative bias can be subtle, and sometimes individuals are completely oblivious to the underlying current of bias in their behavior and the language and phrases they use,” Nolan says. “The first step is awareness.

There are illuminating tools for identifying unconscious bias like the implicit association test on social attitudes designed by Harvard University.”

Undertake mentoring and sponsorship: “If the firm is a small start-up, or there is a lack of senior women, explore the possibility of cross-firm mentoring programs,” Nolan says.

“To assist on every level, reverse mentoring should be considered. Pairing younger employees with executive team members to mentor them on various topics of strategic and cultural relevance will educate and transform the mindset of the whole firm.”

Emphasize next-level success. This action pertains to retaining and advancing women in the business structure. “Women need to see a viable path towards career progression laying the foundation for success,” Nolan says. “There should be a focus on the promotion process and transparency to ensure that women have equal opportunities for advancement.”

Give female representation on the board. Firms can enhance gender diversity by having a skilled professional female independent director serving on the board of directors and advisory boards of fund structures. “This can boost investor perceptions around inclusion as well as shift perspectives,” Nolan says.

“Diversity, particularly gender diversity, is still one of this industry’s biggest challenges,” Nolan says. “Women continue to show the value they bring to the table, and to leave them out of leadership is leaving money on the table.”

About the author

Allison Nolan (www.athena.ky) is the founder and managing director of Athena International Management Limited, an award-winning boutique governance provider offering experienced independent directors to the international alternative investment funds community.

She is the author of the upcoming book, Madam Chair, which discusses the transformation that enhanced gender diversity and inclusion can bring to the hedge fund industry.

Nolan has been a director of regulated entities since 2002 and has served as a full-time professional independent director since 2005.

She serves as the Chair of the Education Committee of the Alternative Investment Managers Association in the Cayman Islands and has contributed to several legal journals and industry publications.

More about Irish Tech News and Business Showcase here.
FYI the ROI for you is => Irish Tech News now gets over 1.5 million monthly views, and up to 900k monthly unique visitors, from over 160 countries. We have over 860,000 relevant followers on Twitter on our various accounts & were recently described as Ireland’s leading online tech news site and Ireland’s answer to TechCrunch, so we can offer you a good audience!

Since introducing desktop notifications a short time ago, which notify readers directly in their browser of new articles being published, over 50,000 people have now signed up to receive them ensuring they are instantly kept up to date on all our latest content. Desktop notifications offer a unique method of serving content directly to verified readers and bypass the issue of content getting lost in people’s crowded news feeds.

Drop us a line if you want to be featured, guest post, suggest a possible interview or just let us know what you would like to see more of in our future articles. We’re always open to new and interesting suggestions for informative and different articles. Contact us, by email, twitter or whatever social media works for you and hopefully, we can share your story too and reach our global audience. We are agile, responsive, quick and talented, we look forward to working with you!

If you would like to have your company featured in the Irish Tech News Business Showcase, get in contact with us at [email protected] or on Twitter: @SimonCocking