Women running the money? Rarely at hedge funds

Women running the money? Rarely at hedge funds

LONDON (Reuters) – Generous salary and juicy bonus? Check. Client meetings at private members’ club? Check. Swanky Mayfair office? Check. Company maternity scheme? Maybe, we’ll get back to you.

Clare Flynn Levy, CEO of Essentia Analytics is seen in this undated handout photo obtained by Reuters March 28, 2019. Clare Flynn Levy/Handout via REUTERS

In the competition for talent, the hedge fund industry still has an edge over many other areas of finance, except, it would seem, when it comes to employing women.

Women are in the minority across the financial industry when it comes to top jobs. A Reuters analysis of regulatory filings shows the proportion is especially low among British hedge funds, most of which are private and not bound by disclosure rules.

Just seven women were hired or promoted last year as investment executives at 20 of Britain’s top private hedge funds, the lowest level in at least a decade, the analysis found. They took on 82 men in that period.

Of all the places to work in hedge funds, the investment team is the most coveted. Portfolio managers or traders decide where to invest client money and are traditionally the highest-paid members of staff. Such roles are a launch pad for star managers to set up their own firms in the future, establishing the next generation of hedge funds.

In Britain, these roles are registered with the Financial Conduct Authority (FCA) under a category known as the ‘CF 30’ function, which also comprises senior marketing jobs.

A Reuters analysis of CF 30 filings for 76 financial firms showed hedge funds registered women at a fraction of the rate of other finance companies.

(For a graphic on British hedge funds lag on diversity of key staff, click tmsnrt.rs/2UNZpml)

For an interactive version of the graphic showing registration rates across financial firms in Britain, click here tmsnrt.rs/2HA0lb3.

Hedge funds say they struggle to find women to work as portfolio managers and point out that women are better represented in other areas, including compliance and legal counsel. These are middle-office or back-office positions, rarely involved in investment calls.

People who work for or in financial services say more female candidates would emerge for trading positions if hedge funds cast the net wider for potential candidates, and offered better maternity packages and mentorships.

“Hedge funds will all say they don’t get female applicants but are they even looking for them? Do they care? The data suggests no they don’t,” said Yasmine Chinwala of think tank New Financial.

Unlike the rest of the financial sector, where large, listed companies are now required to disclose pay gaps between men and women, and are under public pressure to have more women in senior roles, hedge funds can mostly operate below the radar.

Usually privately-owned and run by their founders, they are not the target of government drives to improve female representation in finance.

“Public scrutiny, and more specifically, mandated government-backed scrutiny … delivers results,” said Chinwala. “These sectors have shown they are not going to make significant changes themselves without a big, concerted, external push.”


Three of the 20 top British hedge funds covered in the Reuters analysis commented about their record of hiring women.

“We have women represented across all functional areas of the firm as well as in senior management positions which are not covered by CF 30 registrations, which represents a small proportion of our staff,” a spokeswoman for Marshall Wace said.

The firm has registered three women in the CF 30 category since 2009 compared with 40 men over the same period.

“Algebris continues to invest in women’s careers, developing talent and creating the next generation of female leaders in finance,” said a spokesman for the firm, which registered nine women and 24 men as a CF 30 since 2009.

Emso Asset Management said 35 percent of its employees were women and said it paid employees for the first 26 weeks of their 52 week maternity leave. It has registered nine women and 30 men as a CF 30 since 2009.

“Our diversity in employee base reflects the diversity of markets within which we make investments,” Chief Operating Officer Rory McGregor said in an emailed statement.

Emso was the only one of the 20 hedge funds to comment publicly on its maternity pay.

Paid leave after becoming a parent can vary widely between firms. One portfolio manager told Reuters she had to argue her case to get paid while on maternity leave. She declined to be named for fear of damaging her career.

Valerie Kosenko, at recruitment consultant Mondrian Alpha, said maternity pay was an important consideration for a lot of women looking to work in the hedge fund industry.

“I don’t think hedge funds gave a lot of thought to it at all. It’s something that hedge funds can definitely improve.”

The 10 largest U.S. hedge funds with a UK office – including Citadel and Millennium Management – registered slightly more women than their British counterparts, at nearly 13 percent, in 2018, according to the Reuters analysis.

A spokesman for Millennium declined to comment. Citadel did not respond to requests for comment.

CF 30 is an imperfect measure of diversity because firms can have a different interpretation of the FCA guidelines as to who should be registered.

Some firms register investor relations staff as CF 30. Women tend to be well-represented in such jobs, meaning that the CF 30 category may exaggerate the actual number of women hired or promoted to be traders.

In the decade covered by the Reuters analysis, the ratio of women employed under the CF 30 designation by 20 of the top private British hedge funds never went above 23 percent and averaged 16 percent.


There are no comparable figures on hedge funds’ portfolio manager hires in the United States, but data on U.S. firms founded in the last few years show the industry remains dominated by men. Women-led firms managed only about 3 percent of the assets in new funds launched between 2013 and 2017, according to figures from Hedge Fund Intelligence.

Jane Buchan, who spent nearly 20 years allocating money as chief executive of PAAMCO, one of the world’s biggest investors in hedge funds, says female money managers have to work harder to get investors to trust them.

“Women need to outperform significantly in order to have the same asset levels as men who perform worse,” said Buchan, who now runs her own fund, Martlet Asset Management.

“With this sort of outcome, which can be shown in academic studies and what many women perceive from their own interactions with investors, why try?”

Man Group, one of the few listed hedge funds, is the only UK hedge fund firm to sign up to the British government’s Women in Finance Charter, which sets targets to increase female representation in the upper echelons of the City.

The London-headquartered firm is targeting 25 percent female representation in senior management roles by the end of 2020 from 22 percent last year and has introduced a number of measures to improve gender diversity, including a returners program for women who left the industry.

It offers 18 weeks paid leave globally for new parents, male or female.

Man Group registered five women as a CF 30 last year, but that represented a re-categorization to comply with European rules rather than new hires.

“We have concentrated on making sure internal people can meet their potential, introduced a lot of mentoring, ensured that we always consider a female candidate and looked at things that have historically slowed down hiring women,” said Man’s chief executive officer, Luke Ellis.

Women held 13 percent of investment management roles at Man Group globally in 2018, up from 11 percent in 2017 and 8 percent in 2013, a source familiar with the matter told Reuters.


Interviews with nine women who work or worked as portfolio managers in Britain and the United States, said hedge funds could be a tough sector for female investment managers. Some of them had experienced disparaging comments about their appearance or their investment abilities.

Male colleagues making unwelcome advances at female co-workers on nights-out was not an unusual occurrence, according to seven women who worked in a variety of different roles for hedge funds, including as traders.

One hedge fund reassigned the female toilet on the trading floor as a men’s toilet, meaning women on the investment team had to walk to another part of the building, two of the women said.

None of the women, who requested anonymity to avoid damaging their careers, worked at the hedge funds named in this story.

Clare Flynn Levy, a former hedge fund portfolio manager who now runs her own behavioral analytics company, said women might put up with a toxic work culture for a while but ultimately they tended to leave.

“In retrospect, I think I used a combination of working very hard, laughing off the sleazy bits and occasionally putting my foot down if I felt someone had crossed a line,” she said.

Slideshow (3 Images)

Kosenko, the recruitment consultant, said she has had a hard time convincing women to join hedge funds where they might be the first female on the trading floor.

But with investors increasingly considering diversity when deciding where to put their money, some hedge funds are looking to shake up their ranks. Last year, Kosenko had five meetings with hedge fund clients about hiring women. In the first few months of this year, she has had four.

“I think in general the big trend is let’s grow the talent and let’s go outside of what we are used to — white males from Goldman Sachs,” she said.

Additional reporting by Svea Herbst in Boston and Carolyn Cohn and Kirstin Ridley in London. Editing by Carmel Crimmins

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Mutual funds start to put their mouth where their money is

Mutual funds start to put their mouth where their money is

(Reuters) – Corporate America’s biggest shareholders have traditionally been content with sharing their views on a company’s strategy privately with management.

FILE PHOTO: Logo of global biopharmaceutical company Bristol-Myers Squibb is pictured at the headquarters in Le Passage, near Agen, France March 29, 2018. REUTERS/Regis Duvignau/File Photo

But now some mutual funds are beginning to rethink their stance, amid pressure from investors for them to justify the fees they charge and a push to boost the performance of their holdings.

Wellington Management Company LLP’s decision last month to speak out against drug maker Bristol-Myers Squibb Co’s proposed $74 billion acquisition of Celgene Corp, calling what would be the largest-ever pharmaceutical takeover too risky and expensive, sent ripples across the investment world.

This is because these tactics have typically been the purview of activist hedge funds like Starboard Value LP and Elliott Management Corp, not a large institutional money manager like Wellington, with $1 trillion in assets under management.

But in the case of Bristol-Myers, Starboard spoke out publicly against the deal one day after Wellington unveiled its stance publicly.

Wellington’s vocal opposition to the deal is the culmination of some mutual funds gradually feeling more emboldened to publicly challenge a company’s strategy, asset management executives and corporate governance experts say.

“There has been a growing chorus among investors who want these firms to speak up. With Wellington speaking up, it is going to put pressure on the others to do the same,” said Lawrence Glazer, managing partner at Mayflower Advisors, which invests with Wellington funds.

In January, chemicals company Ashland Global Holdings Inc agreed to changes to its board after pressure from asset manager Neuberger Berman Group LLC, which has about $300 billion in assets under management.

T. Rowe Price Group Inc, which manages close to $1 trillion in assets, has opposed several acquisitions, including Michael Dell’s offer to take his eponymous computer maker private, because it felt the proposed deal undervalued the company.

Spurring on these funds to challenge companies publicly is the need to show their worth as so-called active money managers, picking stocks rather than just betting on indexes.

At a time their performance has been lackluster and many have struggled to keep up with their benchmark index, they are under pressure from index-tracking funds who are gaining more market share in asset management. These “passive” money managers charge investors far less, in part because they do not need the army of analysts and portfolio managers to make investments.

“More funds are willing to agitate in search of returns,” Mark Shafir, Citigroup Inc’s co-head of global mergers and acquisitions, said on Thursday at the corporate law institute conference organized in New Orleans by the Tulane School of Law.


Despite their deep pockets, taking a public stance on corporate strategy does not come easily to many of these funds, in part because they are unaccustomed to readying the kind of presentations aimed at swaying other shareholders.

For example, Wellington’s statement on Bristol-Myers Squibb’s Celgene deal was just four sentences long. By contrast, Bristol-Myers published a 46-page document defending its deal.

The world’s biggest active mutual fund managers, including Fidelity Investments and Capital Group, have preferred to use their influence discretely, taking advantage of their access to management to gain insight into a company’s strategy and offer feedback behind closed doors.

To stay on good terms with corporate management, large mutual funds have often been happy letting activist hedge funds agitate over a company’s perceived problems.

To be sure, even passive investors have started to pressure companies behind the scenes, especially on social, governance or climate change issues that a younger generation of investors cares more about.

For example, BlackRock Inc and Vanguard Group voted against management at oil major Exxon Mobil Corp in 2017 over its reluctance to disclose the risks it faced from climate change, and pressured weapons manufacturer Sturm Ruger last year over its refusal to publish a report about the safety of its products.

“Corporate America had better take note because the folks who actually pick stocks have finally decided to flex their muscles,” wrote Don Bilson, head of Event Driven Research at Gordon Haskett Research Advisors.

Reporting by Svea Herbst-Bayliss in New Orleans; Additional reporting by Ross Kerber in Boston and Mike Erman in New York; Editing by Greg Roumeliotis and Matthew Lewis

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Your Money: Pay yourself first? Last is how small biz often works

Your Money: Pay yourself first? Last is how small biz often works

NEW YORK (Reuters) – Everyone knows the Golden Rule of business is to pay yourself first. But more than half of small business owners are going months without pay – if they are taking any at all.

FILE PHOTO – An employee of a bank counts US dollar notes at a branch in Hanoi, Vietnam May 16, 2016. REUTERS/Kham

About a quarter of these entrepreneurs go two to six months without pay, and another quarter have gone more than six months without salary, according to a recent survey from Kabbage (kabbage.com), a cash flow optimization platform.

The small business payroll servicer Gusto (gusto.com) finds even more ups and down for its clients. Data on 449 owners shared exclusively with Reuters show that only a handful pulled any paycheck at all in 2018, and the size of the checks varied greatly, with the highest amounts taken in summer.

Average pay chart: tmsnrt.rs/2NWSnsR

The biggest month for an owner’s draw in 2018 was December, with 73 business owners taking checks, and a median check of $5,944, according to Gusto spokesman Rick Chen. The lowest draws were in January, with just 26 owners taking pay, for an average of just $1,991.

“It’s tough. People have to budget,” said Mike Savage, a certified public accountant (CPA) and chief executive officer of 1-800Accountant (1800accountant.com), which offers financial services to small business owners. “We encourage people to budget accordingly – plan for the worst and hope for the best.”


Tony Hernandez, owner of Cienfuegos Cuban Cafe in Simi Valley, California, is among those who have not taken a paycheck at all.

Since he started his food business over three years ago, he has earned tips, but otherwise it all goes back into the business. Some expenses, like his car and gas, get billed through the company. His wife’s job covers living costs and provides health insurance for them and their two kids.

“I don’t know how else I would be able to do something like this without my wife,” said Hernandez, 46.

For Hernandez, long-term planning is less about retirement than about expanding to a second location, with the ultimate dream of a stall at the Los Angeles airport.

“The way I look at my business is: I’m fully invested in this to make it work. That’s investing in my retirement,” said Hernandez.

What keeps Joanne Sonenshine up at night has been the inability to plan. The 42-year-old runs a partnership advisory company in Washington called Connective Impact that helps connect companies to investments with social impact. She regularly takes a salary, but often has to pause it, depending on when clients pay.

The partial U.S. government shutdown at the beginning of the year was particularly crippling, because many of her clients depend on federal funding. Two big contracts disappeared suddenly.

“A huge amount of money went up in smoke. I can’t catch up with that,” said Sonenshine. “You start to worry if you can make it. There’s the fear of failure, the fear of letting your family down. What happens if I can’t pay my taxes? Will the IRS come after me?”


This is, indeed, a daunting year for small business taxes. The Tax Cuts & Job Acts passed in 2017 created a new 20 percent deduction for individuals earning business income – but the fine print is complicated. Those paying quarterly taxes in 2018 before all the rules were sorted out may have to make adjustments. That is on top of the difficulty of figuring out quarterly tax payments on fluctuating income.

“With the new tax law, there’s even more incentive for the self-employed entrepreneur to pay themselves less,” said Savage, because they will avoid payroll taxes and other withholdings and boost their deduction.

While more careful cash management may help control the symptoms, this may be one problem for which there is no cure. Most businesses run on small margins, and they are always expanding so as not to stagnate.

“We’ll always been chasing our tails, in effect,” said Rich Patterson, who runs his own marketing company that makes custom products in Vancouver, Canada.

Patterson, 48, had to pause his pay over the summer, when there was a worrisome lag. “I watch the sales figure really closely, and I knew we were having a good year. It didn’t seem to match up why we were having cash flow problems,” Patterson said.

The choice became paying himself and contributing to retirement or paying his staff. “Honestly, it’s just not possible to pay yourself first,” Patterson said. “I wouldn’t be able to sleep at night if other people are losing out.”

Editing by Lauren Young and Jonathan Oatis

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