The proportion of women working in private markets is growing all the time. The gender equality case for women to play a larger role is clear, but investors should also hope the trend continues for performance reasons. Moreover, women are likely to become the key driver of the asset management industry in the coming years as their wealth grows.
Female employment in the alternative assets sector, which includes private markets, rose to 20.2% of the overall workforce at the end of 2020, up from 19.7% the year before, according to Preqin. (1) Admittedly, the proportion of senior positions held by women remains low, at just over 12%, but that seems likely to change, given that women now fill 31.5% of junior positions and account for 23.7% of middle-ranking employees. The trend should be welcomed by investors, given there is plenty of evidence to suggest that women are equally effective investors as men.
In addition, women seem to show more affinity to ESG themes that are increasingly influential in private markets and elsewhere. A recent study by RBC Wealth Management found that women are more than twice as likely as men to say it’s very important that the companies they invest in incorporate ESG factors into their policies and procedures. (2)
Female Trailblazers in Finance
A recent burst of high-profile female appointments in the world of finance suggests the ability of women investors is finally being recognized. In February 2021, for instance, Jane Fraser was appointed CEO of Citigroup, making her the first woman to lead a major Wall Street bank. Furthermore, a growing number of women are opening, or have recently opened, hedge funds around the world, according to a recent report by Bloomberg. The trend, said Bloomberg, was because “investors now believe that diversity in money management strengthens performance as well as society.” (3)
There are already many highly successful women to be found working in private markets; we highlighted a few of them below:
Dominique Senequier is the founder and President of Ardian, one of Europe’s largest private equity businesses. Senequier has won international recognition for her contribution to the finance industry, regularly appearing at the top of the rankings of the most powerful personalities in the world. In 2012, she was awarded the prestigious Chevalier de la Légion d’Honneur by the French state.
Sandra Horbach is the Managing Director & Co-Head of US Buyout and Growth at The Carlyle Group. She oversees Carlyle’s three largest private equity funds, with approximately US$40 billion in capital under management. Horbach has been quoted as saying (4):
There’s a statistic that shows a man will apply for a job if he’s 50% qualified for the job, whereas a woman won’t apply until she’s 100% qualified. So, I always tell women, raise your hand, volunteer for tough assignments, don’t wait until you’re 100% prepared to do anything. Jump into things and swim. Take chances. Women are often more risk-averse with their careers, so I encourage women to take chances and volunteer for tough assignments. Likely they’ll do a great job and they’ll be recognized and rewarded and hopefully promoted as a result of that.
Alicia Gregory is the Head of Private Equity at Future Fund, Australia’s sovereign wealth fund, with US$144 billion under management in 2021. She previously worked at MLC, the wealth management business owned by National Australia Bank. Under Gregory’s leadership, Future Fund has established a reputation as one of private equity’s “most prescient investors,” according to Venture Capital Journal. (5)
Meanwhile, Nishi Somaiya, Global Co-Head of the Growth Equity business in Goldman Sachs’ Asset Management division, believes (6):
Senior female role models are one of the most important factors for encouraging junior women … [Women] look for other women who look like them. A male joins a firm and he’s inspired to progress because he sees other men.
The Growth Influence of Female Investors
Apart from their obvious ability, there is another reason why the financial services industry in general needs to do more to attract and promote female staff. Women are playing an increasing role in household finances and investment decisions, and the industry needs to better reflect that fact by becoming more gender diverse. In the US, for example, nearly nine in 10 women who are married or live with a partner said in 2020 that they were involved in spending and investing decisions in their household, up from just 42% in 2012, according to a report from the consumer research firm Hearts & Wallets. In addition, 31% of women who live with a significant other said they were primarily responsible for financial decisions. (7)
During the pandemic, investment platforms and trading apps reported a new wave of female customers. Moreover, female wealth is growing rapidly and catching up fast with that of men, according to research from the Boston Consulting Group and UBS.
Indeed, according to a report from McKinsey (8), attracting and retaining female customers will be a critical growth imperative for wealth management firms in the coming years. The report, produced in 2020, estimated that “an unprecedented amount of assets” will shift into the hands of US women over the coming years.
The report explains:
By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess—a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States. After years of playing second fiddle to men, women are poised to take center stage.
Similar trends are likely to be seen around the world. So, it may well be that in 10 years’ time there will be no need to write an article celebrating the success of female investors because it will simply be taken for granted. More gender-balanced teams could yield three major gains: diversification, expanded talent pool and access to "female capital". (9)
Petiole is an equal-opportunity firm that continues to uphold diversity and inclusion at the workplace.
Women are opening hedge funds at a record pace around the world, Escalon 12/24/22
Women of Influence, Venture Capital Journal, 07/01/21
We talked to one of the most senior women on Wall Street about big deals, investment mistakes, and career advice, Insider 04/14/2017
How Goldman changed its ways to boost women at the top, Financial Times, 06/05/2017
Women taking bigger role in family finances, despite men: Report, Investment News, 06/10/2020
Women as the next wave of growth in US wealth management, McKinsey, 07/29/2020
Women in Private Equity: The Limited Partner Perspective, World Economic Forum, 03/2016