One of Trusted Insight’s missions is to help promote the achievements of women in institutional investing. When it comes to tackling the gender gap and engaging more women to consider a career in institutional investing, some of the institutional investors we spoke to cited areas where improvements could be made in getting women interested in finance and then enticing them to stay.
We have interviewed over 40 institutional investors, here are some of their insights on how to improve gender equality in institutional investing:
I’ve talked to other women about this. The question of how do you get women into the pipeline for investments broadly is a really vexing one, because there is absolutely no reason why they can’t be good at it. We have shown ourselves to be good at it. It is endlessly intellectually stimulating. I just don’t know what it is: either something turns them off, or the selection process selects against them.
Interestingly enough, that’s not necessarily the case in firms outside the U.S., particularly in Asia. I think that’s true across the board, which is counter intuitive. I can think of Asian banks that have been run by women long before there were senior women at American banks. Some of it may be a cultural thing as well as other influences here in the U.S.
Kathryn J. Crecelius, Chief Investments Officer, The Johns Hopkins University
View the full interview here.
I think [the reason women are better represented in endowments than other areas of finance] is the long-term nature of endowments. We don’t have a liability schedule other than the payout to the University. That enables us to think longer-term. I think women tend to be more long-term minded, which is consistent with the goals of an endowment: what decision can I make today that will have a long-term positive effect on the university.
To that end, I also think women shy away from more short-term risk, although that may be based on more anecdotal evidence than anything substantive. I recently attended an industry women’s forum in NYC and the topic of there being so few women in hedge funds became a focus. One of the reasons cited was that hedge funds involve a lot of short-term high stress and expectation; if you don’t make it you’re out. There also appeared to be few opportunities for women to be mentored and encouraged from the initial recruiting process through the portfolio management levels. Of course there are a number of very successful women hedge fund managers globally, but they represent such a small minority within the total pool of managers. The hope is that will begin to change.
I think women have good intuition and good long-term judgment. So being benchmarked to long-term metrics is something women are more comfortable being measured against. Endowment returns are [calculated] on a 3-, 5-, and 10-year basis, so it’s a different sort of risk taking.
Another reason there may be more women in endowments and foundations versus other sectors of finance and investing, is perhaps a greater personal alignment with the university or foundation’s mission. Women have a propensity to participate in civic and charitable activities. To that end, an investment leadership role within an E&F (endowment and foundation) combines a passion for investing with aspirations to serve a charitable mission. It’s a unique combination that likely appeals to women.
This past year, one of my missions has been to advance the discussion around diversity and family leave policies – they are absolutely terrible within private equity. I ask all my GPs about diversity, not only in terms of ethnicity but gender as well. Often GPs tell me that it's really hard to find women to hire and that few women apply for private equity investing roles. Some have even said that women don’t apply for their roles because of the travel and long hours. Not a good answer, especially since you see women in the IR (Investor Relation) roles, which require just as much travel and time. You also see more women in management consulting roles, which probably require long hours and even more travel. The short answer is that we need to do a better job to attract and retain women in private equity.
The other area I am focused is family leave policy. When I ask about it, the most frequent answer I get from GPs is, "we don't have one." In order for you to build a diverse and inclusive environment, you have to start thinking about family leave early on. Ideally, it needs to be a family leave policy, not just a maternity policy because we shouldn’t put the burden of raising a family solely on women. You have to make it equal across genders. If women see men also taking family leave, that balances out the gender disparity in the workplace, and I think we would get more women into private equity and keep women in the industry. At a minimum, family leave should be 12 weeks fully paid, no impact on carry, vesting or bonus. Tech companies have generous family leave policies, and their retention rates for women are much higher.
If Mark Zuckerberg can take family leave and Facebook can still survive, then I think it’s fair to say that anyone else should be able to take time off to raise their family. I push all our GPs to have a response on what their family leave policy is. Being in a position to help drive that mission is something I'm very passionate about, and hopefully we'll move the needle.
Chrissie Chen Pariso, Senior Portfolio Manager, Private Equity, Exelon Corporation
View the full interview here.
Regarding our efforts to recruit women, we recently expanded our parental leave program substantially. It was four weeks. It's now 12 weeks paid parental leave. We're trying to think of everything to make PRIM a good lifestyle choice as well.
Michael Trotsky, Chief Investment Officer and Executive Director, Massachusetts Pension Reserves Investment Management Board
View the full interview here.