Women and men differ in their investment behavior and risk tolerance – the psychology and economics literature has documented this difference. Consequently, women are less likely to become investors, and when they do, they choose less risky investments. But is this a pure gender effect? What about the impact of education, or environment?

In 2003, Atkinson, Baird, and Frye addressed these questions in a seminal article that sparked off a multitude of further research. The authors compared risk measures and performance for male and female fund managers.

No risk or performance differences…

So, do female fund managers manage differently? No, they don’t!  To control for all effects except gender, Atkinson et al. match 72 bond funds managed by female managers to bond funds managed by male managers on manager tenure (to capture asset management experience), fund size and style (to capture performance differences due to economies of scale and investment universe), and then compute performance and risk measures. Total return, performance rank, Sharpe ratio, return standard deviation – none of these measures differ significantly.

Total return [% p.a.] Performance rank Sharpe ratio Return standard deviation
Male managers 5.99 54.07 -0.21 4.03
Female managers 6.41 49.21 -0.15 4.07
p-value 0.64 0.29 0.49 0.95 
Table 1: Performance and risk measures, Source: Table 3 of Atkinson et al. (2003)

 … but different reactions of investors

But, there is a difference between female- and male-managed funds in terms of net flows into funds. Flows into female-managed funds are significantly lower than those into male-managed funds.

Male fund managers Female fund managers p-value
Normalized asset flows 0.646 0.163  0.01 
Table 2: Net fund flows as a fraction of fund assets, Source: Table 5 of Atkinson et al. (2003)

So, mutual fund investors seem to use gender as an investment criterion. This is one explanation why asset management firms (whose profit is closely correlated with assets under management) employ few female fund managers.

To learn more about this topic, check out the original article: Atkinson, Baird and Frye (2003): Do Female Mutual Fund Managers Manage Differently?, Journal of Financial Research, Vol. 26, No. 1, pp. 1-18.

Author: Linda Klingler