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Women managers a safer bet than men when it comes to hedge funds

Hedge funds managed by women consistently outperform their male-led counterparts, but investors have been slow to allocate to them, according to new research.

Hedge funds managed by women consistently outperform their male-led counterparts, but investors have been slow to allocate to them, according to new research.

In Women in alternative investment: A marathon not a sprint, the New York-based financial advisory and research firm Rothstein Kass examined performance of women in the alternative investment industry.

It is the third annual survey by Rothstein Kass on the issue, which also surveyed 440 senior women in the alternative investment industry on their outlook and prospects for the coming year.

It found its in-house Women in Alternative Investments Hedge Fund Index returned 6% for the six and a half year period ending June 2013.

Over the same period, the S&P 500 gained 4.2%, while the HFRX Global Hedge Fund Index dropped 1.1%.

Meredith Jones, head of the Rothstein Kass Institute, the firm's research division, said in the report: "Women simply perceive risk differently than men and tend to manage their portfolios accordingly.

"This results in less performance slippage, a diminished tendency to sell at the bottom, and a more consistent application of their strategies. Over time, these traits can create a meaningful performance differential."

Despite this, 73.5% of investors do not expect to increase their allocation to women-owned or managed funds in 2014.

Meanwhile, 24.5% expect allocations to increase a little, but only 2% expect allocations to women-owned or managed funds to increase significantly. 

But, Kelly Easterling, the principal of Rothstein Kass's Walnut Creek office in California, said the lack of women-owned and managed funds made it difficult for investors to allocate to them on a large scale, but added it would be difficult for new funds to spring up until there is more money flowing towards existing women-owned and managed funds.

This lack of availability was the main reason cited by investors as to why they have no mandate to allocate to women-owned and managed funds.

Jones said: "At the end of the day, we believe this consistent out performance will drive performance-hungry investors to increasingly allocate to women-owned and managed hedge funds, spurring more launches as well as hiring trends in the industry." 

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