Editor’s Letter – Issue 143

September 2019

Hamlin Lovell
Originally published in the September 2019 issue

Our cover story is our seventh 50 Leading Women in Hedge Funds report, published in association with EY. Women are slowly but surely attaining more senior positions in investment and non-investment roles, but they do remain under-represented in key portfolio manager roles, and more so as entrepreneurs who have started their own companies. At the same time as celebrating their achievements, we also need to investigate why women branching out alone have, on average, raised less in assets than men.

Some women have been unfortunate in partnering with sub-par and/or sub-scale platforms and service providers, which have handicapped them due to factors such as: delays in regulatory authorisation of investment vehicles; failure to obtain regulatory approvals for distribution in various countries; insufficiently robust infrastructure to get through operational due diligence routines; restricted investment market and exchange access; uncompetitive financing terms and fees; suboptimal trade execution, and excessive expense ratios on investment vehicles. Portfolio managers are sometimes described as “stock jockeys” and the best jockey in the world will not win the race if they are riding a three-legged or injured horse. Women therefore need to choose their business partners carefully – and the choice of platforms and structures is very wide. 

All-women platforms or multi-manager vehicles may create some sense of camaraderie, but women need to take a cold and hard-nosed look at whether the set up is up to speed in all key areas. All-female shops are not automatically going to be at the leading edge of best practices in all areas. Some have experienced significant problems, seeing serial failures year after year. Success stories purely involving women will grow with time, but to exclude men altogether in a form of “reverse discrimination” is arguably no better than the original form of discrimination. “Minority mandates” awarded by some US pension funds seem to be for relatively small amounts of assets, and the typical ticket sizes are much smaller than some pension funds have provided through seeding programmes.

Some obvious questions women fund managers might ask include how much a platform has in total in assets and how much it has raised for its managers, through which avenues, and from which geographies and investor types? How many types of investment vehicles has it launched in which domiciles, and how long did the process take? For instance, for a UCITS we have heard of six week launches, and also two years of delay with no launch. 

How many regulatory approvals has it obtained for active marketing to professional or other investors in how many countries – or to what extent and in which countries is it relying on reverse solicitation? Are there any established capital introduction services – and are these part of the package or subject to extra costs? Are third party marketers or placement agents likely to be the main source of asset raising? How big is the geographic footprint – and how many other platforms or placement agents might be needed to plug the gaps?