Is your fund managed by a white man? Find a minority or woman

27 January 2020 Consultancy.eu

On the back of a mixed year for hudge funds globally, placing fund managers under increasing scrutiny, a new debateful analysis by Bloomberg suggests that white men are the poorest leaders of hedge funds in terms of financial performance, outflanked by minority and female managers. 

To populate the analysis, the researchers looked into the performance of nearly 3,000 funds, including two thirds of the industry’s top 1,500 managers by assets under management. They compared the performance of these funds for a three-year period based on who is leading them, differentiating between two groups: those led by white men, and those led by minorities or women. 

Hedge funds controlled by white men had an average return of about 3.9% over the period assessed, but interestingly, those controlled by minorities or women significantly beat that performance, at 6.6%.

The impact of diversity on hedge fund performanceThe gap between the two groups differs per fund type. In the equity hedge space, white men led funds enjoyed a 4.3% return, compared to 7.0% for minority or women led funds, and in the case of credit hedge funds, both groups fared better, with the performance gap slightly larger at 3.2%.

Macro funds however had the biggest disparity. During the past years, the funds not managed by white men outpaced their peers by about 41%, the data showed. Macro funds focus on predicting the development of broad, global trends and holdings may include long and short positions in various equity, fixed income, currency, commodities, and futures markets.

The analysis comes at a time when hedge funds are under pressure. According to data from Eurekahedge, hedge funds returned on average 6.96% throughout 2019, lagging the gains enjoyed in the broader stock market. Despite about one-third of hedge fund managers generating double-digit returns, the below par performance saw investors pull a staggering $132 billion out of the hedge funds industry last year.


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