Women Leaders and Money Makers — Where are we in 2021?
Stepping into a Woman’s World
March marks the International Women’s month, and 2021 marks an already significant year for female leadership not only in U.S., but around the world. Janet Yellen becomes the first woman to serve as the secretary of treasury for the first time; Kamala Harris becomes the first female vice president; Ngozi Okonjo-Iweala was appointed as the first female leader of the World Trade Organization; Jane Fraser becomes the first woman to lead a major U.S. bank; and Cathie Wood now manages a few of the most profitable funds in the country.
Leaders of the Century
Between the United States and Europe, women leaders are working through diplomacy with each other, rather than force. Between Jane Goodall, Janet Yellen, and Ursula von der Leyen, women are in the forefront of running new, progressive ideas through their own government, and it’s working.
Janet Yellen, a veteran in the White Houses’ arms of economics, will be able to bridge the gap between the Fed and the treasury with her impressive background. Yellen was not only the first woman to have led both the Fed and the treasury, but, was the first human being to have done so.
Christine Lagarde, the first woman to head the European Central Bank, had done tremendous work since she assumed office in 2019, including keeping the European economy afloat in the midst of the pandemic and Brexit.
Ursula von der Leyen, the head of the European Commission since 2019, and the 4th most powerful woman on Forbe’s List, have made quite a few aggressive stances with it comes to keeping corporations accountable. Earlier this year, von der Leyen have expressed the need to regulate tech giants in the ensuing weeks after the capitol riots in the US.
We’re stepping into a more compassionate world that is stepping up to hold these new-age corporations accountable as more women rise in the ranks. Assertive on certain policies but lenient on others, we will have to count on other leaders to trust and foster relationships between countries and industries.
Bread Winners
Throughout the pandemic, we found that more women lean towards tech stocks, while more men lean towards financial stocks. This enabled an advantage for female money managers as we see a rise in tech profits [1]. Female managers tend to have a better approach in managing risk and tend to have a longer view on the market [2].
Let’s take celebrity money manager Cathie Wood for an example. Cathie gives the meme economy its much needed quantitative pull. An experienced economist, Cathie produces routine videos where she narrates the economic data such as employment numbers and treasury yields. On top of that, she explains these numbers that support ARK’s bull cases on Tesla and Bitcoin in layman terms.
How does Cathie’s success fit into the bigger picture?
In 2019, Preqin, the financial data provider, found that only 19.3% of hedge fund employees are women, and only 10% held decision making roles such as a portfolio manager [3]. Within the same playground, asset managers owned by women and minorities cover only about 1% of the investment industry’s $60T+ in assets [4].
Based on Bloomberg data, in 2021, out of more than 5000 actively managed funds based in the U.S., only 6.24% of the funds were managed by women. That’s about the same number of money managers named James and Christopher on the same list. Cathie Wood topped the list when ranked by 2020 total return NAV, the second woman on the list is Alger’s Teresa McRoberts, followed by Fidelity’s Nidhi Gupta. Out of the top 100 funds, only 4 were women. This is not to say that female managers don’t make good returns. Rather, there simply isn’t enough data to make a statistically significant conclusion.
In 2001, MIT published a paper with the title “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment”. The authors theorized that generally men trade more than women, and that overconfident investors will trade too much. Through surveys of over 35,000 households, the authors found that, essentially, men trade more irrationally than women and trade in overconfidence and false faith. Single men had the lowest rate of return, following married men, following single women, then finally married women tend to be the most rational out of the four groups.
Recognition Overdue
Would this be the decade of the woman? As a woman, my optimism stands biased. To elevate women’s voice we will also need men allies that are willing to recognize the gender bias inside and outside the money making world. In 2018, only 5% of CEOs of major corporations in the U.S. are women[5]. We’ve long understood that a diverse board of directors correlates to a healthier profit margin and levels the playing field[6]. Seeing representation at the top, meaning seeing someone of your own similar background, can encourage more emerging female leaders in the future. An inclusive culture not only fosters more collaboration but it also advances innovation that allows companies to hit financial targets[7]. At the end of the day, it is a win-win situation that has been long overshadowed by the old-school mentality of corporate America. The catch up game has started, and companies that fall behind in incorporating an inclusive culture and a diverse board will fall out of the spotlight to their more progressive peers.
