Advice from one female portfolio manager to others

ft.com/content/d149a632-14ee-11e9-a168-d45595ad076d

January 15,
2019

Leonardo diCaprio in 'The Wolf of Wall Street' © Alamy

When #MeToo started trending in 2017, after a string of sexual misconduct allegations were
made against the Hollywood mogul, Harvey Weinstein, my non-finance friends were
surprised that I didn’t tweet my own examples of harassment. “But I thought Wall Street was
full of Harvey Weinsteins!” said one.

I am, admittedly, a statistical anomaly: a female portfolio manager. A Morningstar study

pegs female representation in PM roles in the US at 10 per cent — much lower than in
medicine (33 per cent) and law (36 per cent), and about the same as the tech industry and
television writing, which enjoys a culture that out-bros technology (I should know, having
dated a writer for Saturday Night Live).

My friends’ image of my job comes from watching shows like Billions and movies like The Big
Short. The writer Michael Lewis described the most successful salesmen as the Big Swinging
Dicks in his book about Wall Street, Liar’s Poker. Bulls — slang for market optimists — are,
well, male. Even investing’s humble heroes such as Warren Buffett and Oaktree’s Howard
Marks are men, not to mention its more aggressive stars like activist Carl Icahn and Bill

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Gross the bond king. If you can name one woman investor who is not UK superstar Helena
Morrissey, I’ll give you a share of Berkshire Hathaway. (That’s worth nearly $300,000 for you
non-Buffett followers).

These pop-culture references help explain why the students in the investing classes I teach
at Columbia Business School in New York are 90 per cent male, even though the student
body is close to gender parity.

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Happily, I’ve encountered more asexual
introverts in the course of my career than
lecherous gropers. No one has ever put an
exploratory hand on my arse. The closest I
have come to harassment was right after I
started work at the Capital Group in 1999,
when someone let slip that the group’s
nickname for me was “Ally” (as in McBeal, the
heroine of the 1990s TV show). The aggregate
culture of my workplaces has been as far from “oversexualized” as Sesame Street is from The
Wolf of Wall Street.

So without a sleazy culture to blame for investing’s dearth of females, let’s examine another
usual suspect: work-life balance. There is nothing extraordinary about the demands of
portfolio management relative to other highly compensated jobs. PMs don’t have to bill
hundreds of hours or meet gruelling patient quotas. They just have to beat a benchmark —
post a higher return than the S&P 500, say, for equity PMs, which we call “generating alpha”
— and alpha doesn’t review time sheets (if only).

The psychocultural barriers women investors face are hard to overcome precisely because
they are not obvious. When the rare female MBA student ventures into my office to ask
whether she should consider managing money as a career, I say absolutely — but keep in
mind what’s expected.

First, self-promotion is required for actual promotion. Unlike law or medicine, there is no
degree in portfolio management. The entry position in money management is typically the
analyst role, and the path of least resistance is to stay in it. If you want to become a PM, you
have to convince your bosses that you would make a great one. Guess who’s good at that?
Men. (Guess who gets punished for that? Women.)

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You’ll also have to fight the well-worn trope of the hysterical female. It’s often said that Star
Trek’s highly rational science officer, Mr Spock, would make the ideal PM. And aren’t women
supposed to be the emotional ones? To beat that stereotype, you cannot act like the angry
male investors I’ve worked with — screaming over a soured bet on a paging company, or
yelling so loudly about a buy recommendation on a failed insurer that a painting falls off
your wall.

Instead, be like Susan, the lone female PM in my group when I started, who maintained
steely calm as the market threw up all over my JCPenney bond recommendation, while
some of her male counterparts demanded hourly reassurance that the retailer was not
going bankrupt.

Even if you can become Ms Spock, you might fall victim to investing’s love affair with quants
who base their stock choices on elaborate mathematical formulas — and its implications for
women. (Remember “Math Class Is Tough” Barbie?) Don’t be intimidated by the hideously
complex spreadsheet your male counterpart brings to investment committee. There are
highly quantitative ways to generate returns and there are also approaches (for example Mr
Buffett’s) requiring little math beyond addition and subtraction.

This brings me to my final piece of advice — not for the student but for the active money
managers who should be recruiting her. I won’t waste too much time on the failure of active
management. But here’s a thesis: perhaps alpha is rare because alpha males are mostly in
charge of generating it. The seminal (no pun intended) study of male versus female
investors showed that women had better results than men. What if the way to reverse the
shift to passive investing is by giving more women the chance to manage money? The boys
have had their go at it. Could women do any worse?

The writer is a high-yield bond portfolio manager a bit ahead of her benchmark — for now —
and an adjunct business school professor

Women must fight casual belittling of their abilities / From Svetlana Bakhtina, GSA Capital,
London, UK

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