Female alpha: Women investors in family offices discuss DEI's rising role

As diversity, equity and inclusion (DEI) considerations become increasingly important in the investment world, women managing investments say they are keen to see more gender diversity in their investment decisions and risk management.

However, gender lens investing -- an approach that considers gender equality and diversity when making investment decisions -- remains a rather challenging proposition, as does incorporating broader DEI requirements. 

“As a female, I'd like to see more female co-founders in my investee companies but it's more about what value the female can bring to the table”, Cathy Dong, who manages investments at a Singapore-based single-family office, told AsianInvestor.

“For example, if it's a baby and mom startup, a female co-founder is important because she's closer to end users. Overall, the founding team should have a high level of understanding of the industry, so female or male matters only from that context,” said Dong. 

For Ekta Tolani as an investor, a woman on the investee company team means more order and adds to better risk management.

“I feel more comfortable when I see a woman in the core decision-making team,”, said Tolani, who leads capital raising and portfolio management efforts at Crown Capital, a US private equity buyout fund.

Prior to Crown, Tolani served as a chief investment officer at a large family office in the Middle East.

However, considerations for investing are more nuanced than just seeking gender diversity, even for female investment officers.

Dong eloborated that looking at diversity outside of gender is also important when looking at business models.

“If a startup is about to scale to Indonesia or Vietnam, a person who speaks local dialects matters. If a startup is about to acquire Indian or Chinese clients, it must understand the market penetration issues in that local market. Since I am more into scalable or cross-border companies, a founding team from different backgrounds is important,” she explained.

In a similar vein, Tolani noted that “family offices or other institutions do not necessarily look for diversity unless that’s part of their core mission. Most investors look for returns and a solid team, regardless of women. It’s the credentials of the team that are important”.

“When there is a woman on board, on the private equity (PE) and family office (FO) team there is a chance they look for a woman on the investee team. That said, there are hardly any women in FO and PE firms. So, it's natural that most investments go without a thought of inclusivity,” she added.

Of course, having female investors on the core team may also may not mean that gender lens investing is a focus of a single-family office.

Winnie Chan, another female chief investing officer at a single-family office in HK noted, “we don't have specific preference or bias in investing in companies with more diversity.”

“Firms that conduct more rigorous ESG investing may have that,” she added.

STRATEGY SESSION

A recent Fidelity study showed women investors are outperforming their male counterparts by 40 basis points on average. 

The study also noted that women operate with a long-term view, a more "buy and hold" approach. As such, they’re less likely to make rash, emotional decisions when it comes to the stock market.

“Women tend to be more risk-aware and cautious in their decision-making. This can lead to a more prudent approach to investment management, considering potential risks and taking steps to mitigate them” said Chichi Hong, who manages investments of an HK-based single family office and is a partner in a VC firm investing in Web3 and artificial intelligence startups.

“Women’s insights in sectors where women are the primary target audience are also important. These could be consumer goods, retail, and related sectors where product trends, marketing strategies, and customer experience matter, Hong added.

She also sees women as investors bringing unique insights for socially responsible investing (SRI). The Global Gender Gap Report 2023 by the World Economic Forum points to similar trends.

STILL CHALLENGING 

It has been long said that women in the investment industry remain underrepresented due to historical gender biases and the persisting lack of diversity.

The female investors speaking to AsianInvestor shared similar views.

“In instances where women demonstrate strength, knowledge, and resourcefulness, there can be a reluctance to support or celebrate their success, often stemming from societal norms that favor male accomplishments," said Dong.

“We know it is a male-dominated industry and making a mark or climbing the success ladder for a woman is much harder because not only she wants to deliver but she is also fighting against the perception of the world about her capabilities. It just puts a lot more pressure and women mostly take it too hard on themselves," added Tolani.

When there are more men working in higher positions at work, there are fewer chances for women to get into similar roles, noted Hong. "The only thing I can do is to keep learning and be better at work to overcome challenges.”

Chan has also adopted a learning approach. “While it was not intuitive for me to understand deep tech and blockchain technologies, I went out of my comfort zone and learned the future trends of investment in these new technology industries and the process was fascinating. “