I am sure many of your saw the recent video of hedge fund Billionaire Paul Tudor Jones where he shared his thoughts on why women will never, ever, ever be represented in the elite world of macro trading. Needless to say this made me crazy. I immediately reached out to my friend Susan Solovay who was the founder of Pomegranate Capital, a hedge fund of women managers, to work with me to write a response. In her work SUSAN has identified hundreds of women managed hedge funds. Together we wrote the piece below which we chose to publish on LINKEDIN to get it out there on a timely basis.
If you have been following my blog for a while you will know that I spent a good part of 2009 working on a paper in partnership with The National Council for Research on Women called “Women in Fund Management: A Roadmap to Critical Mass and Why it Matters.” I was passionate about this paper because I wanted to understand myself why, WHY were there so few women in the business of money. (download report by clicking here) As you will see there are a lot of reasons and better yet we presented a long list of solutions. I am TRULY hoping that because of these ridiculous comments by Mr. Tudor Jones we can revive this conversation and take action!!!! Please send the paper around to everyone and anyone you know as not only does it apply to the money management business, but ANY area where women are underrepresented.
Can mothers be traders? ( Published on LINKEDIN)
According to Paul Tudor Jones, the billionaire hedge fund manager, they cannot. We find this statement both disturbing and perplexing since we are women whose life experience would suggest otherwise, and we spend much of our time encouraging young women to pursue careers in finance generally and trading in particular. The fact that Mr. Tudor Jones chose to provide this answer to a question unrelated to the topic he addressed is equally confounding. It takes a special brand of sexist thought to associate trading and breast-feeding in response to the question: “ Please reflect on the makeup of the panel –– rich, white middle age men who were mentored by the same and what it takes for someone different to have a seat at the table and finally share their voices from a powerful place.” For a man who boldly trumpets his business acumen alongside his philanthropy and good deeds, one is left wondering, “what the heck was he thinking?” ( click to watch the panel discussion )
The general nature of his answer was simply that once women become mothers, they are incapable of being excellent traders. His specific turn of phrase was as follows: “we will never see as many great women investors or traders as men, because as soon as that baby’s lips touched that girl’s bosom, forget it.” The factual basis of his response seems more appropriate for a barbershop than a boardroom. His opinion was mainly based on TWO women he knew at EF Hutton back in the 1970’s, though he said he has witnessed this “time and time again.” What is “this”? Is it that women left the business for some reason after having children, or is it him noticing that upon their return to work after their maternity leave their investment prowess disappeared which he then associated to breast feeding? We both breastfed our babies at the same time as we were making investment decisions and we can assure him that women can do both. If you were a good trader before you have children, you can be a good trader after having them. Motherhood has nothing to do with it.
What was true for us is also true for others. As fund investors we are able to easily find hedge funds managed by women (some with 4 children) who are able to produce returns that even Mr. Tudor Jones would be pleased to post. Chesapeake Partners, BlueCrest, Sisu, Metropolitan Capital, Feingold Asset Management and a host of other hedge funds run by women traders (each who are also juggling the duties of motherhood) are doing quite well. Should we attribute their focus and returns to luck? Or maybe they didn’t breastfeed so it was easier to keep their mental abilities in check? It seems he is recommending that before any of us hire a woman manager we include in our due diligence a question like “do you ever intend on having children while actively managing your portfolio?” If the answer is yes then take a pass.
While it is easy to dismiss Mr. Tudor Jones’ comment as ridiculous, the sad reality is that many successful and powerful men, who have a great influence in our society, agree with him – although many, if not most, would have the common sense not to trumpet it in public. The belief that women cannot be good mothers and committed to their careers means they don’t get hired, don’t get mentored, and don’t get promoted. Sadly, this was not the first time Mr. Tudor Jones shared his “wisdom” as he boasted that he recently gave this advice to members of the 100 Women In Hedge Funds Network. My hope is that the women in the audience challenged his conclusions, but I guess it was not enough to sway his thinking as he seemed very willing to share it again, even when that was not the question.
That said, perhaps we should be grateful for Mr. Tudor Jones’ honesty as we now have an opportunity to discuss the real barriers that are preventing women from succeeding in this important sector of the financial services industry. In a world where money is power, hedge fund managers have a lot of both, and thus his statement that women will “never be” represented is profoundly disturbing.
So why are there so few women hedge fund managers? A report by the National Council for Research Women entitled “Women in Fund Management: A Road-Map to Critical Mass and Why it Matters” published in 2009 identifies a number of reasons.
First, there is an assumption that women are not good managers of risk, but the evidence from studies about gender and risk taking actually shows that the opposite is true. The paper identifies a number of studies that suggest women managers, on average, may, in fact, be more risk measured, thereby delivering better long-term risk adjusted returns. Maybe it’s time to reread the study “Boys Will be Boys: Gender, Overconfidence and Common Stock Investment“ which documented that men trade 45 percent more than women. A more recent study showed that women hedge fund managers outperformed male managers in 2012. Hedge funds run by women made an 8.95% return while the global hedge fund index only returned 2.69%.There are many other studies that make the case for women and for the benefits of diversity in general.
The second reason, often cited for the paucity of women managers, is that there is a pipeline problem. In other words, there are not enough women choosing to enter the field with the ‘right’ backgrounds to enable them to be successful. This has become the classic argument for almost any business sector facing challenges from under-represented populations. While there is merit to this, it is much more prevalent in the case of hedge funds because they represent the ultimate boys-club. New hires, with rare exception, need to look and act like the current traders on the desk; white men. If the new job is in marketing or management however you may see a woman being hired because we all know women can do those roles. It is only the highly intellectually and physically demanding trading roles that they are not up for.
The third and most important reason there are not enough women traders today is because of the difficulty women have in raising capital — or “capital punishment” as it is called. Endless studies have shown that women have a much harder time raising money than men, despite balanced credentials. One well-known study presented investors with two copies of an almost identical prospectus of a company going public. The only difference was that one prospectus disclosed the biography of a woman CEO and the other, a male CEO. Investors overwhelmingly chose to invest in the company which was run by the man, as well as saying that they would invest up to 300% more in the company with the male CEO. For anyone who believes that we live in a meritocracy, this is a great study to refer them to.
This difficulty in raising capital is especially true in the hedge fund space. It is logical to assume that this is due to deeply embedded biases and beliefs people hold about whom they will trust with their money, as the study above indicates. One such belief we can now identify is that motherhood and investment prowess are mutually exclusive. Is there evidence to support this assumption? No. In fact, there is not a shred of measurable data that support the premise that when women have babies, their biology changes such that they can no longer concentrate long enough to make intelligent judgments on how to deploy capital.
For Tudor Jones, who makes his living with supposed logic and who presents himself to the world as being interested in solving society’s deepest problems (and in fairness, has done anawful lot of good in that regard), the right response to the question “what would it take for someone who is different to get a seat at the table? might have been “I don’t know, but I would like to figure it out.” Then he could go on to devote some of his brain and some of his resources to examining the research, research that would clearly suggest that there is a huge bias in our society preventing people who deserve an opportunity from getting one. The evidence would lead him to cast aside any belief that motherhood and trading are incompatible, and that there are many other valid reasons for why women leave trading, or are not there to begin with. One other step would be to talk to successful woman traders andask them to help him understand why there are so few women. If they are anything like us, breastfeeding will not come up as one of the reasons.
Women in Fund Management: A Road Map to Critical Mass and Why it Matters presents a long list of solutions to help advance women in the areas of trading and portfolio management. The paper is freely available for download by clicking here.
Susan Shaffer Solovay and Jacki Zehner
Susan Shaffer Solovay was the Founder and CEO of Pomegranate Capital, a fund of funds that invested exclusively with women run hedge funds. Prior to that she held a variety of positions in the financial industry, starting out trading commodities at EF Hutton. She also served on the Board of the Trustees of The Partnership for New York and was the founder of a foundation supporting a New York City public school.
Jacki Zehner was the first woman trader, and youngest woman, to be made partner of Goldman Sachs. Since leaving Goldman she has dedicated her resources towards creating a more gender balanced world.
Both would welcome the opportunity to speak with Mr. Tudor Jones and his fellow managers on how to increase the participation of women as traders in the hedge fund industry.