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On the radar

A different view

A different view

Mark Dunne
Friday 17th November 2017

Far from just making up the numbers, women in senior roles are making a positive impact on performance. Mark Dunne looks at what women are bringing to the table.

“Post the financial crisis there was a realisation that people cut from similar cloth was not necessarily the best team, however brilliant they were individually.”

Dame Helena Morrissey, The 30% Club

The June/July edition of this publication did not include a single word spoken by a woman. The same was true for the accompanying supplement on responsible investment, a topic that brought the absence of female voices into sharper focus.

This was something I was not consciously aware of until Jackie Turpin, head of finance at the Joseph Rowntree Charitable Trust, informed me. She was the first, but not the last, reader to email me over the lack of a female point of view.

As a journalist, I will hide behind the fact that sometimes we have to work with the people that companies put in front of us. This reads like I’m passing the buck, but many businesses still have limited options when it comes to adding a senior female voice to the debate.

Only around two in every 10 investment managers in the UK are female, a survey by Mercer published in September found. The number of women directors on corporate boards makes only slightly better reading. They occupied a quarter (25.5%) of such roles in the UK companies that were included in the MSCI ACWI index in September 2016.

The under representation of women in senior roles is surprising given that MSCI has found a link between women sitting on corporate boards and a stronger financial performance.

Examining data between 2011 and 2016, MSCI found that US companies with at least three women around the boardroom table saw return on equity (RoE) gains of 10%, while earnings per share (EPS) improved by 37%. This compares to a -1% decline in RoE and EPS contracting -8% in businesses that started the period with an all male board.

Women in the hedge fund industry also have a strong, albeit short-term, track record. In the first seven months of 2017 the HFRX Women index’s returns were twice as high as those recorded by the HFRI Fund Weighted Composite index, which gauges the performance of general hedge funds, at 9.9% to 4.8%, respectively.

Despite her findings, MSCI’s vice president, head of impact and screening research, Meggin Thwing Eastman, is yet to discover if there is a cause and effect relationship between women and financial performance.

“Everyone is trying to put their finger on it,” she says, “but there is nothing out there that says if you add one more woman to your board you are going to get a superior financial performance.” One possibility could be that adding different views to a discussion creates more awareness in solving problems and fuels creative thinking.

Wim van Hyfte, Candriam Investors’ global head of ESG research, agrees. There are 13 people in his team, six of which are women. “It [working with women] gives you a different perspective,” he says. “We have different approaches in making a decision. There is a more balanced view if you integrate women into your team.”

However, MSCI’s findings must be taken with a huge dose of caution. Is five years, yet alone only seven months for HFRX, long enough to make an assumption about long-term performance drivers?

“That is a matter of debate, but it was long enough to at least suggest that there might be something there and suggest avenues for future research,” Thwing Eastman says.

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