The uncertainty that COVID-19 unleashed on financial markets earlier in the year has been challenging for hedge fund managers, to say the least. But there is a small group that has been coping better than average: female hedge fund managers.
In the first four months of 2020, woman-led hedge funds lost 3.5%, according to the data group HFR’s Women Access Index. During that same period, the HFRI 500 Fund Weighted Composite Index, a measure of performance that includes funds led by both men and women, dropped 5.5%.
In the first four months of 2020, woman-led hedge funds lost 3.5%. During the same time, hedge funds in general dropped 5.5%.
It’s not clear why woman-led funds have performed better this year, or even whether this is a trend or simply a one-time event. There is also debate over the data itself: Women manage about 1% of hedge fund assets, according to global investment firm Aberdeen Standard. Is this sample size large enough to draw conclusions from? Those who believe in the data theorize that women may simply be better at protecting against losses. Performance data seems to support this theory: Woman-led hedge funds posted smaller losses during the market selloffs in February and March, according to HFR indices.
Why would female fund managers be more skilled in this way? Perhaps they have better skills in general. Higher barriers for women to enter the industry may filter out all but the top entrants, so those who do gain entry are the best of the best.
This article appeared in the Fall 2020 issue of Insigniam Quarterly. To begin receiving IQ, go here.