Opinion: Why are there fewer women among alternative investment managers?

With ESG gaining so much traction in recent years, it would be safe to assume that gender diversification - and the concept of women in finance - was now well reflected in the makeup of the world's top firms.

While it's a given that Asia must still play catch-up with Europe in terms of gender equality, the expectation is that companies - both big and small - are making headway in closing the gender gap.

However, from my recent conversations with investment managers in the asset management industry, Asia still has a long way to go, even in those large companies with deep roots in Europe.

In private markets, in particular, they said that women are still a rare breed compared with the public market.

GENDER BIAS

“I don’t actually know why. I’m thinking maybe it has something to do with the fact that the private market is a place where you need to have a firm hand and a strong voice when you are sourcing deals or fighting over prices," a Hong Kong-based alternative investment lead of a large European life insurance company told AsianInvestor.

"Maybe women are not traditionally seen to be good at these skills - there are just so few females in the alternative investment world,” she said.

She recalled being taken by surprise during a recent video meeting with fund managers on the Chinese mainland when the only woman in the line-up of suit-wearing managers was the translator.

“It made me feel somewhat uncomfortable,” she said.

PUBLIC PRIVATE DIVIDE

Another woman, the Greater China head of institutional business development of a European fund manager in town, echoed the view. However, she noted that in the public market, where asset classes are just more commonly handled by both men and women, the situation is generally better.

“Maybe one reason is that people tend to hire someone similar to them, so the situation can be hard to change in the private market,” she noted.

Even men are feeling the gender imbalance. A Hong Kong-based chief investment officer of a large life insurance company who spoke to AsianInvestor immediately agreed with the phenomenon.

“I don’t know why but this is definitely the case in the private market, which is something of an ‘old boys' club’,” he said.

Nevertheless, he added, the situation, at least in his company, was getting better. From senior management to the whole investment team, the CIO said his company had hired more female professionals than 10 years ago.

“We value diversity a lot. If we are presented with two candidates with similar backgrounds, we may even go with the woman rather than the man to build a more diversified team,” he said.

While some maintain that a more diversified investment team can contribute to better performance, he said he believed that this was still difficult to quantify.

THE ASSET OWNER ROLE

While in his case, this works for a well-recognised brand in the market - where issues around gender diversity are taken seriously, what of those mid-to-small sized players that operate in the darker corners of the private market? Do they recognise gender as a business issue?

While ESG development is recognised as a generally positive theme, putting it into practice in this segment of the industry is another matter. Senior managers I talked to in the private equity and venture capital space said that ESG is not something that was high on their agenda.

At the centre of this argument is that private capital is more about growth and that for VC portfolio companies, survival is key. ESG, they argue, will only distract from their main raison d'etre which is future-proofing returns for limited partners.

While it can be argued that asset management is about returning profits, the pressure will continue to build to make for a fairer workplace. Larger asset owners - particularly public institutions - need to step up and make a difference.

For the alternative investment lead I mentioned in the beginning, she is using her role to do so. 

“I can use my power as the asset owner to ask for more specific data from my fund managers on the gender diversification of portfolio companies," she said. "Don’t just tell me how many female staff you have. Tell me about their positions, whether they are in core business functions or just in accounting.”