Buy and hold.
It's harder than it sounds. But it appears that women have more patience to deliver better longer-term results than men when it comes to managing alternative investments, such as hedge funds, derivative contracts, commodities, private equity and venture capital.
Over the five-year period ending in September 2012, an index of 67 women-owned alternative investment funds delivered an compound annual return of 3.6 percent, compared with a 3 percent loss for the all-inclusive HFRX Global Hedge Fund Index over the same period. The results were compiled by New Jersey accounting firm Rothstein Kass & Co., which specializes in advising alternative investment firms. The annual Rothstein Kass Women in Alternative Investments survey, conducted in September and October 2012, aims to help investors understand how and why women manage alternative investments.
Men overwhelmingly dominate the fund management industry. According to a 2009 report on women in fund management produced by the National Council for Research on Women, women account for barely 10 percent of managers of traditional mutual funds, and about 3 percent of managers of alternative funds. The report is a gender analysis of the causes of the 2007-2008 financial meltdown. It reinforces the conclusions of the reports on women in alternative investments: Female fund managers deliver consistent results over the long haul because women have less turnover in their portfolios.
While men make swifter decisions based on projected top and bottom lines, women consider both, taking time to examine nuances that could affect returns. It takes women longer to make decisions but when they do, they stick with them and eventually reap results that are at least as good as those of men and often better.
Female money managers "shouldn't be the only thing you consider," says Meredith Jones, the Rothstein Kass director who wrote the report. "Allocation and long-term goals come into play ... but if you are taking the long view, this is a factor that can help you make more money."
While the report is intended for institutional investors, it has implications for individual investors, says Camille Asaro, a partner with KPMG LLP who contributed to the report when she was a principal with Rothstein Kass.
Consistent with other findings about how women manage investments, "Women take lower risks because they do more research and are more comfortable holding their securities longer," Asaro says. But, she adds, that point of view also correlates with levelheaded money managers of both genders. "It goes to the investment style of a good manger, male or female," Asaro says. "It's not necessarily a gender thing. You always have to make sure that the manager is right for your strategy."
The interest in women who manage alternative funds and traditional mutual funds is in line with rising concerns about women's overall economic power as consumers, corporate managers and institutional money managers. According to both the Rothstein Kass report and a similar report published in 2011 by Barclays Capital Solutions Group, many large public pension and investment funds are channeling more money to women- and minority-directed investments of all sorts. (Jones also wrote the Barclays report.) Public funds in California, Ohio, New York, Illinois and Maryland have promised to channel more money to women- and minority-owned funds.
There aren't many women-managed funds to receive all that attention. The Barclays report found that women-managed funds accounted for only 3.3 percent of all hedge funds.
From brain science to consumer analysis, indications are that women spend and invest differently as consumers and managers. For instance, ongoing analysis by Credit Suisse indicates that women are a steadying force on boards and in management, earning less in boom times but losing less in recessions, for an overall performance that edges out the norm.