So far this year, female managed funds on average delivered returns of -57 basis points compared with their benchmarks. All male run funds performed worse, with average returns of -164bp. © JohannesEisele/AFP/Getty Images

All-women and mixed-gender US fund teams outperformed all-male portfolio management teams so far this year, according to a Goldman Sachs analysis that raises fresh questions about the investment industry’s progress in addressing its gender diversity problems.

To mark the centenary of US women winning the right to vote, Goldman analysed 496 large-cap US equity funds with combined assets of $2.3tn to compare the performance of funds where at least one-third of the portfolio management roles were female with portfolio management teams run entirely by men.

Women led funds remain a rarity across the investment industry in spite of a growing body of evidence that more diverse teams produce better results. Just 14 of the 496 US funds analysed were run by all women teams. Goldman classified an additional 49 funds as “female-managed” funds run by teams where one-third of the portfolio managers were women. In contrast, 380 of the funds had all male teams.

So far this year, female managed funds on average delivered returns of -57 basis points compared with their benchmarks. All male run funds performed worse, with average returns of -164bp.

“Even after adjusting for risk, female managed funds outperformed their male counterparts amid the coronavirus-related market swings,” said David Kostin, Goldman Sachs’ chief US equity strategist.

JPMorgan’s $1.3bn Tax Aware equity fund, which has been run by Susan Bao for the past 12 years, ranked as the best women-only managed performer. It has outperformed its benchmark by 27 percentage points so far this year.

Baillie Gifford’s US equity growth fund, which counts Kirsty Gibson as a member of its portfolio management team, ranked as the top female managed fund. It has outperformed its benchmark by 55 percentage points so far this year.

Mr Kostin said gaps in performance were partly explained by divergences in the positioning of female managed funds and other large-cap funds in the information technology and financial sectors.

“Funds managed by at least one-third women portfolio managers hold a smaller underweight in information technology compared with their non-female managed counterparts,” he said.

The overweight position held by female led funds in US financials stocks has been smaller during this year than that controlled by non-female led funds.

Investment consultants and other influential gatekeepers who provide advice on fund picks have stepped up their efforts to better incorporate measures of diversity into manager selection processes.

Morningstar, the data provider, found that women accounted for just 14 per cent of the 25,000 fund managers working across 56 countries at the end of 2019. The representation of women in portfolio management roles was unchanged since 2000 even though fund management companies have become increasingly vocal advocates for greater diversity at public companies.

A 2018 Morningstar study of US managers found that the gender of a portfolio manager made no difference to performance in either equity or bond funds.

“We are now gathering information to assess whether more diverse teams do better by looking at gender, ethnic and racial data across functions including research and trading as well as portfolio management,” said Sarah Bush, head of North America manager research at Morningstar.

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