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Women-Managed Funds Are Outperforming as Tech Exposure Pays off, Goldman Finds

KEY POINTS

  • 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.
  • 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.

Mutual funds handled by ladies are surpassing those managed by men this year as greater relative direct exposure to innovation names drives efficiency, according to a new research study from Goldman Sachs.

The firm discovered that 43% of women-managed funds– as specified by those with a minimum of one-third of portfolio manager positions held by females– have exceeded their benchmark this year, compared with simply 41% of those managed by guys. Adjusting for volatility, the average fund with all females portfolio managers has returned more than double that of the normal all-male managed fund.

“Female-managed funds endured a lot of the market swings, with the typical fund outperforming its standard by 50 [basis points] from the start of the year to March 23rd. On the other hand, the common fund with no ladies managers lagged its standard by 20 [basis points] during that period,” Goldman strategists led by David Kostin wrote in a note to customers. “Considering that the marketplace trough, 48% of female-managed funds have created alpha, compared to just 37% of all-male funds.”

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

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

The S&P 500 reached a brand-new all-time high earlier in August, wiping out its coronavirus-induced losses. The huge bulk– 86%– of the rise has been driven by the details innovation sector. Facebook, Amazon, Apple, Microsoft, and Alphabet are all trading around their record highs.

“While constraints around portfolio weight and diversity has led the average large-cap shared fund to hold the biggest underweight to the sector since a minimum of 2012, funds managed by at least 1/3 ladies PMs are relatively less underweight than their non-female-managed counterparts,” the firm stated.

Of the 496 large-cap shared funds examined by the company, with a combined total of $2.3 trillion in properties under management, just 63 funds, or 13%, qualify as females handled. 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 overall assets under management, 57% remain in funds with solely male-managed groups.

In spite of women-managed funds exceeding year to date, Goldman found that 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 Study Fund – D (JNRFX) is the biggest fund managed totally by ladies. The TIAA-CREF Growth & & Income Fund – W (TGIWX) and the Putnam Sustainable Leaders Fund – A (PNOPX) are the 2nd and third largest, respectively.

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

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