Hedge funds led by women are outperforming the industry—but still struggle to attract capital.
A new survey by consulting firm KPMG revealed that funds owned or managed by women find capital-raising more challenging than their male peers do. This was despite female-led funds outperforming the industry nearly every year since 2007, according to Hedge Fund Research (HFR).
The data firm’s performance index of hedge funds owned or managed by women had five-year returns of 6.25% as of June 2015—the highest of its composite indices. In comparison, the HFRI Fund Weighted Composite Index and HRFX Global Hedge Fund Index gained 5.13% and 1.54%, respectively, over the same time period.
Since January 2007, women-led hedge funds returned a total of 59.43%, significantly higher than the 36.69% in gains posted by the composite index. Global hedge funds, on the other hand, reported negative returns.
Despite proof of outperformance, 79% of respondents to KPMG’s survey said they believe it is more difficult for women to succeed in the industry.
Additionally, most respondents said it is more difficult for women-led funds to attract capital, with nearly half citing the stereotype that women are more committed to family and personal responsibilities than to work as a top barrier.
“Every year… respondents have said they believe it’s harder for women-owned or -managed funds to obtain capital than it is for their male-run peers,” said Kelly Easterling, KPMG audit partner and co-author of the report.
Easterling added this could be because funds run by women don’t have the same levels of visibility and investor access funds led by men.
Female-led funds accounted for a small portion of respondents’ portfolios, with 67% of investors allocating 10% or less of their portfolios to them. Nearly 72% of investors blamed the low number of funds managed by women for the low allocation.
However, 26% of investors expected these allocations to increase in the next 12 to 18 months, with 38% saying they believed emerging-manager mandates would up demand for female-led funds.
KPMG concluded there are reasons to be optimistic about the future of women in alternatives.
Despite challenges including lack of positions for women to build track records, and access to investors and capital, the majority of respondents said they believed the number of women in the industry will continue to rise.