Rothstein Kass Survey: Women Hedge Fund Managers Provide Additional Alpha

New York, NY – January 10, 2013 – Rothstein Kass, a leading professional services provider to the financial services industry, today announced the release of “Women in Alternative Investments: Building Momentum in 2013 and Beyond,” the firm’s second annual report examining the performance, prospects and outlook of women in the alternative investment industry. The report includes a survey of 366 senior women in hedge funds, funds of funds, private equity, and venture capital, as well as service providers to and investors in alternative investments. It focuses on the trends and opportunities for women in the industry, and proprietary performance analysis of women-owned or managed funds.
The fact that women-owned or managed hedge funds have been able to handily outperform their male counterparts is not particularly surprising.
“Our report certainly displays the dichotomy facing women in the alternative investment industry,” said Kelly Easterling, principal-in-charge of Rothstein Kass’ Walnut Creek office. “We definitely see increased demand for women-owned and managed funds from institutional investors, although the pace of investments is not as fast as many of the women we polled would hope. And yet, we continue to see a lack of women in portfolio-related C-level jobs, which typically act as a proving ground for future fund managers. Over time, we anticipate that the demand for gender diversification will become part of the overall portfolio diversification process, prompting more women to enter and stay in the alternative investment industry.”

The Rothstein Kass report found that women hold the highest percentage of C-level jobs within the operational space, at 35.0%, followed closely by C-level compliance and financial positions, at 34.0% and 32.0%, respectively. The percentage of women CEOs and CIOs currently averages less than 20% within the firms polled.

The report did reveal that women-owned or managed hedge funds historically performed ahead of the industry, and was also leading for the year-to-date through September 2012. The Rothstein Kass Women in Alternatives Hedge Index produced a year-to-date net return through September of 8.95 percent, in comparison to the HFRX Global Hedge Fund Index, which has generated a 2.69 percent net return through September. Furthermore, over a five year period, the Rothstein Kass WAI Hedge Index outperformed both the HFRX Global Hedge Fund Index and the S&P 500.

“The fact that women-owned or managed hedge funds have been able to handily outperform their male counterparts is not particularly surprising,” said Meredith Jones, director at Rothstein Kass. “There have been a number of studies that show women investors to be more risk adverse, and therefore potentially better able to escape market downturns and volatility. The outperformance by women-owned or managed hedge funds should make the case that investing in these types of funds is a smart business decision, rather than one that just feels good.”

Other notable findings include:
  • Respondents cited two primary reasons for the shortage of women in the alternative investment industry: 1) lack of available positions in the industry where a woman can develop a track record; and 2) desire – women lacked motivation to enter or stay in the industry.
  • The percentage of women on a firm’s investment committee remained somewhat unchanged from last year’s study, with 10.5% of the respondents indicating that women represented 50% or more of the investment committee. However, a larger percentage of the firms polled indicated that no women were on their firms’ investment committee than last year, at 37.3%.
  • Hedge fund respondents were the most likely to have women-owned or managed status (16.8 percent), followed by venture capital (13 percent) and private equity (12 percent).
  • Over 72 percent of the hedge fund respondents, 71 percent of venture capital and 64 percent of private equity respondents agree that fundraising is their chief concern.
  • Many of the respondents were uncertain that emerging manager mandates would have a large impact on demand for women-owned funds in the next 12 to 18 months. Hedge fund respondents tended to be the most optimistic about the impact of emerging manager mandates, with 25.5% stating they believed these mandates would increase the demand for women-owned funds.
  • Most of the respondents disagreed or strongly disagreed with the statement that there would be fewer attractive investment opportunities for alternative investment firms in 2013 (70%). However, at the same time, those polled agreed or strongly with the statement that it will take longer for investment positions to yield positive returns than in the past (65%).
  • Venture capital respondents (20 percent) seem the most positive about the impact of the JOBS Act on the investment side of the business.
  • Hedge fund respondents (14.3 percent) were the most optimistic about the impact of the JOBS Act on fundraising.
  • 41 percent indicated that family offices are their most fruitful capital-raising venue, with pension funds cited as a growing force.
  • Looking at five-year career goals, 26.8 percent of the respondents would like to be working at another similar fund, while 14.2 want to manage their own fund.

For a copy of the full “Women in Alternative Investments: Building Momentum in 2013 and Beyond” report, please contact Meredith Jones at mjones@rkco.com.

About Rothstein Kass:

Founded in 1959, Rothstein Kass is a premier professional services firm serving privately-held and publicly-traded companies, as well as high-net-worth individuals and families. With more than 1,000 professionals, the firm provides accounting, advisory, auditing and tax services, as well as a full array of integrated services such as litigation and forensic consulting and concierge and tax accounting to clients across industry spectrums and in all stages of development. Rothstein Kass is widely recognized as a leader in the financial services space, consistently ranking among the top CPA firms serving the Hedge Fund, Private Equity, Venture Capital, Broker Dealer and Family Office segments.

At the core of Rothstein Kass’ remarkable success is a commitment to hiring, developing and retaining employees with the same entrepreneurial spirit that permeates the sophisticated business and financial services communities the firm serves.