Have Indian women fund managers done better?

If you have seen the aged ladies in your home managing finances, you would be surprised by the earthy savvy that they bring to money management. They not only bring an understanding of where to spend but also how to spend and how to save for a rainy day. But does such an earthy savvy combined with a good modern education make women better fund managers? On the occasion of International Women’s Day, it would be a worthwhile venture to check if the women fund managers have done much better than their male counterparts. In a recent report in Morningstar, the finding is that women fund managers have actually done better, although the data sample may be smaller. But first how well are women represented in the Indian mutual fund segment.

How well are women represented in fund management?

Women in finance was a very cautious term some 25 year back. Back then, women in finance would be an odd Lalita Gupta, Naina Lal Kidwai or Tarjani Vakil. Then came a host of women who took up careers in banking, insurance and even fund management. According to a study by Morningstar, India has a fairly good representation of women in fund management, considering that we are still in the early stages. So what do the numbers really look like, and is it really representative of the fund management industry?

According to a report by Morningstar titled “Women in the Indian Mutual Fund Industry—2023”, there are a total of 42 women fund managers in Indian mutual fund industry out of the total of 428 mutual fund managers as of January 2023. A more representative data point would be the AUM that they are managing. Interestingly, while the number of women fund managers is less than 10%, the AUM managed by the women fund managers is an impressive 11.19%. Out of the total average AUM of Rs40 trillion in Indian mutual funds, women fund managers manage close to Rs4.43 trillion.

How has the number of women fund managers grown?

It is one thing to look at absolute numbers and percentages, but another thing to see the growth. That gives a much better perspective of how the traction of women fund managers is picking up. Here are some interesting numbers for digestion. For instance, the number of women fund managers was just 18 in the year 2017. From just 18 fund managers, the number of women fund managers has more than doubled to 42 in the year 2023. There has been a slight dip in the AUM in recent months, but that is more due to the exit of two rather prominent fund managers, one of whom moved to a more prominent position within the same group. However, that is another story altogether. The moral of the story, as pointed out by the Morningstar report, is that each year since they started publishing this report, there has been a consistent rise in the total assets managed by women and in the number of women fund managers too.

However, there is still a lot of positives to take away. For example, the number of women fund managers was low as 17 in the year 2017 but had only grown to 30 in the year 2021 and to 32 in the year 2022. Just in the last one year, the number of women fund managers increased from 32 to 42, which is a truly quantum leap and also a measure of their performance (we will come back to that). More importantly, these 42 women fund managers were spread across 24 fund houses. In fact, 5 out of these 24 fund houses had three or more women fund managers while 6 fund houses had two women fund managers. As many as 13 fund houses had at least one-woman fund manager in their fund management teams. It is not just in equity, but the women fund managers are distributed across overnight funds, duration funds, equity funds, allocation funds and solution funds.

How well did women fund managers perform?

That is the proof of the pudding. Interestingly, most of the total open-end assets managed by women fund managers outperformed the peer group average in the 1, 3 and 5-year periods. That is great news at a time when most fund managers are struggling to beat the index and keep talking about the effect of kurtosis on their returns. Incidentally, the study reports that among the open ended funds managed by women fund managers, 82% of the AUM outperformed the peer group average on a one-year basis. One can argue that 1 year is short, but then 93% of the AUM outperformed on a 3-year basis, and 99% of the AUM outperformed on a 5-year basis.

In short, it is the women fund managers who are puling up the performance of the overall fund management industry, more prominently over the long term. On the occasion of International Women’s Day, this is an apt piece of data to keep in mind. Women fund managers are putting up a great show and here is hoping that their tribe increases.