Preanka Naidoo, Portfolio Manager at Sanlam Investments Multi-Manager
This South African Women’s Month – and always – we should shine a brighter spotlight on gender, inclusion, and diversity in the asset management industry. Multiple studies show that changes in parity will not only lead to a more equitable society but also to an enhanced financial performance.
Unfortunately, industry stats don’t paint a strong picture. The South African asset management industry is far from diverse or inclusive, especially regarding women. According to Citywire’s 2022 Alpha Female Report, only 11% of funds domiciled in South Africa are managed by female portfolio managers. This glaring representation of gender disparity calls for introspection and action from the investment community.
Why should investors care about gender equality?
Besides the obvious moral imperative to drive gender equality, there’s mounting evidence that gender differences can have a tangible impact on portfolio performance. Take, for instance, a study by Alexandra Niessen and Stefan Ruenzi, which examined the performance of US equity mutual fund managers from 1994 to 2003. Their findings revealed an intriguing pattern: male fund managers exhibited higher performance volatility, while female fund managers demonstrated more consistent and persistent performance profiles.
Fidelity Investments, a major player in the investment world, conducted its own survey in 2017 to understand gender differences and their effect on fund performance. Surprisingly, only 9% of surveyed women investors believed they could outperform men. However, Fidelity’s analysis revealed that, on average, women investors slightly outperformed their male counterparts.
Of course, as in any debate, there are differing viewpoints. Morningstar’s 2017 study found no discernible difference between male and female fund manager performance. While this may lead to some skepticism, I believe that if fostering diversity offers an avenue for better diversification prospects without compromising portfolio outcomes, it deserves serious consideration.
The financial might of women
The importance of supporting diversity and inclusion of women is underscored by a shift in the financial decision-making landscape. McKinsey’s reports reveal that women in the US now control a staggering one third of household financial assets, totaling a colossal US$10 trillion, with this figure expected to rise in the next decade. This emerging trend is accompanied by an increase in the financial savviness of younger affluent women, as 30% more married women have taken on financial and investment decision-making roles since 2015.
In a South African context, there are multiple compelling reasons to embrace diversity and inclusion. CNBC Africa reports that while women may feel financially insecure, they display superior budgeting and saving habits compared to their male counterparts. Moreover, women are staunch supporters of one another, presenting an opportunity for the investment community to empower and include them actively.
Stats from Satrix, South Africa’s leading indexation investment manager, demonstrate that more women are starting to invest. The SatrixNOW platform, focused on democratising investments, allows investors to access the market with as little as R10. Encouragingly, 43% of registrations on SatrixNOW is from female investors in 2023.
Embracing diversity and inclusion is not just a noble cause; it is a winning strategy for investors. By breaking down barriers and encouraging more women to participate in the asset management industry, we can tap into a vast pool of talent and perspectives that have the potential to drive better financial outcomes. As the global economy becomes increasingly interconnected, navigating complex and volatile market environments require diversified approaches.
Therefore, as responsible investors, we, the South African asset management industry, have a unique opportunity to make a positive impact on society and our portfolios. By supporting diversity and inclusion along gender lines – as well as in all other areas – we will pave the way for a more equitable, dynamic, and prosperous investment landscape. This will benefit us all.