Sex Matters: Gender and Mutual Funds



To shed some light on the sophisticated relationship between women, men andmoney, we investigate gender differences among US equity mutual fund managers. Basedon findings from the literature, we hypothesize that female fund managers take less riskthan male managers. At the same time female managers are expected to follow lessextreme investment styles that are more consistent over time. We also expect them tobe less overconfident and therefore to trade less. The results from our empirical studysupport all of these hypotheses. Given our findings of pronounced behavioral differences,we then turn to the consequences that arise for investors and fund companies. We findno evidence that these differences are also reflected in differences in average fund performance.However, we document that male managed funds are more likely to achieveextreme performance ranks than female managed funds and that the performance of thelatter is more persistent. The more surprising appears our finding, that female managedfunds have significantly lower inflows: a female-managed fund experiences about 18%lower inflows than an otherwise comparable male-managed fund. As fund families earntheir fee income on their assets under management, they seem to have little reason toemploy many women. Thus, we search for compensating incentives to employ a femalefund manager despite a low fund flow.We find that firms with a high probability of beingsued for discrimination, i.e. large and well-established firms, are most likely to employwomen. These are also the firms that cater to institutional investors who often requiretheir business partners to proof workforce diversity. Furthermore, female fund managersare more likely to be employed in less conservative states of the U.S. We conclude withimplications of our findings for investors and fund management companies.


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Ingolf Dittmann