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COVID nightmares for women in hedge funds

Working in an investment role for a hedge fund during a time of family strife is a challenge irrespective of your gender. - In 2013, Paul Tudor Jones controversially claimed that hedge fund managers' returns fall by 10-20% when they're going through a divorce because they lose focus during the "emotional strife." 

Now it seems that the COVID-19 pandemic has had a similar effect - but only for portfolio managers who are mothers. 

A new report* from academics at NEOMA Business School in France and the University of Manchester in the U.K., found that hedge funds employing female portfolio managers with children generated abnormal returns that were at least 6% lower than those generated by all-male funds when schools were closed for lockdown last year. When women accounted for more than 50% of the portfolio management team, the underperformance rose to 11%. 

The academics derived their figures by identifying female hedge fund managers across the world from the Bureau-van-Dijk Orbis and cross-referencing their names against online information to identify which had children and those children's ages. They compared this with performance data from EurekaHedge. The sample included 383 individual hedge funds with all-male managerial teams, and 111 funds that had at least one female manager.

As per the British government's quickly withdrawn infographic, which showed men lounging about and women doing much of the work with the family during lockdown, it seems that portfolio managers who are mothers have done far more pandemic childcare than portfolio managers who are fathers. Male portfolio managers didn't suffer a statistically significant reduction in their performance when the pandemic struck.

By comparison, the academics found that the pandemic's effect on female hedge fund managers' performance was significant, and that it was even greater if their children were younger. 

In a sector that already struggles with diversity, this should not be taken to mean that employing female hedge fund managers is a bad idea. - The study found no significant difference in male and female managers' returns between January 2000 and May 2020. Nor did it find any difference in male and female managers' returns during school holidays, when childcare can be planned ahead. - It was the unforeseen childcare necessitated by the pandemic that impacted female hedge fund managers and that necessitated extra 'unpaid work' at home.

Interestingly, the academics also discovered that male hedge fund managers were potentially less able to take time out for their families when the pandemic struck even if they'd wanted to. - Men typically worked on small teams with just 1.70 team members; female hedge fund managers' had an average of 5.5 people on their teams and should have been better able to share workloads. However, female managers were also under greater pressure to avoid asset withdrawals: just 20% of funds with women imposed a lock-up, compared to 80% of all-male funds.

*When Paid Work Gives in to Unpaid Care Work: Evidence from the Hedge Fund Industry under COVID-19

eFinancialCareers is running a women in tech and finance virtual careers event on Feb 10 2021. Sign up here. 

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Photo by Charles Deluvio on Unsplash

AUTHORSarah Butcher Global Editor
  • Mi
    8 February 2021

    Link to the study :

    As an EMH type, I wouldn't ever be naive enough to seek out the services of an active fund manager, but if I did this paper would certainly influence my decision.

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