women-managed-funds-are-outperforming-as-tech-exposure-pays-off,-goldman-finds

Women-managed funds are outperforming as tech exposure pays off, Goldman finds

A worker assembles a box for delivery at the Amazon fulfillment center in Baltimore, Maryland, April 30, 2019

Clodagh Kilcoyne | Reuters

Mutual funds managed by women are outperforming those managed by men this year as higher relative exposure to technology names drives performance, according to new research from Goldman Sachs.

The firm found that 43% of women-managed funds — as defined by those with at least one third of portfolio manager positions held by women — have outperformed their benchmark this year, compared with just 41% of those managed by men. Adjusting for volatility, the median fund with all women portfolio managers has returned more than double that of the typical all-male managed fund.

“Female-managed funds withstood many of the market swings, with the median fund outperforming its benchmark by 50 [basis points] from the start of the year to March 23rd. On the other hand, the typical fund with no women managers lagged its benchmark by 20 [basis points] during that period,” Goldman strategists led by David Kostin wrote in a note to clients. “Since the market trough, 48% of female-managed funds have generated alpha, compared with only 37% of all-male funds.”

This marks a divergence from the last few years, when performance between women and men-managed funds was largely on par. Higher relative exposure to technology names is driving this year’s split, Goldman said. The firm found that women-managed funds more frequently owned names like Amazon, Apple, Microsoft, Abbvie and Tesla. Funds managed by men, on the other hand, had greater exposure to financial names including Berkshire Hathaway, Wells Fargo and Visa.

That said, Goldman did note that while women-managed funds have more exposure to the FAAMG stocks, they are also underweight the basket. 

The S&P 500 climbed to a new all-time high earlier in August, wiping out its coronavirus-induced losses. The vast majority — 86% — of the surge has been driven by the information technology sector. Facebook, Amazon, Apple, Microsoft  and Alphabet are all trading around their record highs.

“While restrictions around portfolio weight and diversification has led the average large-cap mutual fund to hold the largest underweight to the sector since at least 2012, funds managed by at least 1/3 women PMs are relatively less underweight than their non-female-managed counterparts,” the firm said.

Of the 496 large-cap mutual funds analyzed by the firm, with a combined total of $2.3 trillion in assets under management, just 63 funds, or 13%, qualify as women managed. Assets in these funds reach $261 billion.

There are just 14 funds with all-women management teams, compared with 380 with all-male teams. Of total assets under management, 57% are in funds with exclusively male-managed teams.

Despite women-managed funds outperforming year to date, Goldman found that the the median woman-managed fund has seen slightly larger outflows this year compared with male-managed funds.

According to the funds surveyed by Goldman, the Janus Henderson Research Fund – D (JNRFX) is the largest fund managed entirely by women. The TIAA-CREF Growth & Income Fund – W (TGIWX) and the Putnam Sustainable Leaders Fund – A (PNOPX) are the second and third largest, respectively. 

Funds that have at least one third of women portfolio managers include MFS Value Fund – I (MEIIX), JPMorgan Equity Income Fund – R6 (OIEJX) and Franklin Growth Fund – A (FKGRX).

– CNBC’s Michael Bloom contributed reporting.

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