Hedge Fund Industry Update - December 2022

The demand for female talent in investment funds continues to accelerate, as hedge funds realise the importance of harnessing diverse talent and inclusive practices to further business performance. The sector has historically been slow in its progress of gender representation and was further stagnated by the impacts of COVID-19 in 2020. Two years on and the topic is firmly front and centre of hiring managers’ priorities. However, it is vital that, in order to attract such talent that commitment to gender representation and DE&I as a whole, must be promoted wherever possible; showcasing that every individual has the same opportunity, targets towards gender representation in senior leadership are firmly set, and opportunities for career development are conveyed across your external messaging. In particular, this must be on your company website, essentially your shop window for prospective talent, in job advertisements and echoed throughout the interview process to ensure these commitments are effectively communicated and received.

Portfolio Management; a Shining Example of Return on Investment of Gender Representation

Companies that do not have gender representation on their hiring priorities must remedy this in order to remain competitive and harness diverse talent. Indeed, implementing gender representative measures can increase return. Female-led hedge funds performed ahead of those run by males during the Covid crisis in the PM space, with some suggesting this is due to how females manage risk, making them perhaps more adept at avoiding losses when markets tumble.

A well-rounded DE&I strategy can mitigate risks – when diversity is negated, teams and companies can often find themselves surrounded by like-minded people who will not challenge decision-making plans. Leading multi-strategy platforms including Balyasny, Citadel, D.E. Shaw, Millennium, Point72 and Verition are among the largest employers of female portfolio managers, however consistency across the sector is lacking.

Supporting the Advancement of Gender Representation in Hedge Funds

In the quant space, top-tier hedge funds will typically look for professionals holding a PhD, and it can be difficult to find a strong pipeline of female candidates in this area with such qualifications. This is an issue that needs to be addressed at a much earlier stage; there is a lack of awareness at schools and universities of the variety of careers that are available in finance and the necessary course of action to be followed. One manner in which your company can show support for young females as they consider their career path before university is by supporting STEM-focused non-profits such as?Stemettes?which works to further female representation in STEM-based careers.

In the workplace, providing opportunities for personal professional development is key to create a sustainable succession plan, giving key value-add talent the opportunity to move into senior leadership roles as they progress in their career. This must be promoted at the candidate attraction and interview stages, and of course, implementation followed through with; commitment to gender representation and furthering equity on senior leadership teams cannot fall into the realm of lip service.

Moreover, there are many networking events for women in hedge funds, and the financial services industry in general. Personally speaking, I recently attended a Women’s Event with a top-tier hedge fund which I found to be incredibly insightful and was a great opportunity for me to network with some of the top female talent in the industry, speaking about theirs and my own personal experience of pushing back on the status quo. Companies should ensure their female staff have opportunities to attend such events in order to gain insight into this space from other female leaders’ perspectives, and give a sense of empowerment and inspiration.

Finally, speak to your female employees. We know and have recognised as a sector that female representation is lagging, and it is time to take action. Holding frequent and honest discussions about the challenges that women face in your company will enable a better understanding of how support can be provided to ensure continued professional development, and such discussions can be facilitated through setting up Women Leadership Councils.

Advice for hiring managers

As managers come under increasing pressure from investors and legislators to diversify their talent pool and to facilitate inclusivity, female representation is just one step in this. Homogenous thought is a risk factor to business, and diverse thinking can allow for alternative proposals in the decision-making process and further drive returns.

Many reports show that female professionals are more hesitant to apply for a new opportunity if they do not meet all the experience listed in the job descriptions, but there are means by which this can be mitigated. Instead of terminology such as “must have” or “essential”, use terms such as “ideally”, “beneficial” or “preferred”; this language is more encouraging for a person who may not necessarily tick every box but could still be the best candidate for the respective opportunity. Alternatively, you can be even more clear with a statement that reads similar to “if you do not meet all the experienced desired but believe you would be a good candidate for this role, we encourage you to submit your CV”. To give my own personal experience on this, recently I asked an individual if I may put her forward for a role I thought she would be a great candidate for, but who said she would be hesitant to do so herself. We proceeded to share her CV with my client and a first-stage interview has been arranged. It is vital to put such measures in place to avoid losing out on prospective talent.

To discuss the topics covered in this update, your recruitment processes or new opportunities, please get in touch with Orla Louden , Senior Consultant for Hedge Funds.