Naissance Capital: New Fund Invests In Companies With Female Managers, Anticipates High Returns

More than a year after overleveraging and mismanaged risk provoked a financial crisis that sent the global economy on a perilous downward spiral, analysts are still wrangling over its causes and implications.

But one recurring point of debate is whether a higher proportion of women in senior management positions could have forestalled the crisis. In other words, if women had run the banks, would they have taken on as much risk? Or, if women were better represented in jobs associated with risk-taking, would the economy be healthier?

At least one investment firm is betting on it.

Naissance Capital, a niche money management firm based in Switzerland, is set to launch its Women's Leadership Fund early next year. The Fund will only invest in companies where women are represented on boards and in management, and will take an "activist stance" against companies in which women are underrepresented.

So far, there are only a few funds worldwide that strategically invest in companies with a high proportion of female executives, and the Fund's portfolio managers contend that their investment strategy capitalizes on the advantages of female leadership and will lead to higher returns.

Their claim hinges on recent research, including reports issued by the consulting firm McKinsey and the research group Catalyst, demonstrating a correlation between female management and enhanced company performance. The McKinsey study held that "companies with a higher proportion of women in their top management have better financial performance" (although it didn't arrive at a causal conclusion). Also, two researchers at UC Davis found that men tend to trade more "excessively." In their study, men traded stocks 45 percent more than women, reducing "men's net returns by 2.65 percentage points a year as opposed to 1.72 percentage points for women."

Other research has pointed to an association between risk assumption and testosterone level. A British study suggested that traders with higher testosterone levels tend to take on more risk, and that testosterone can "even affect a trader's ability to engage in rational choice." Another study, published last summer by Paola Sapienza of Northwestern University, surveyed business students at the University of Chicago and showed that male and female students with the same amount of testosterone accepted similar levels of risk in experiments. But Sapienza said that on the whole, the women in her study were "more risk averse than men when it comes to making important financial decisions."

At least some industry leaders appear to agree with Naissance Capital's thesis that female management strengthens performance. Bank of New York Mellon CEO Bob Kelly has said that companies "that have done a better job at getting women into the executive ranks and developing women more effectively" yield "better client service and, ultimately, greater shareholder value over time."

Naissance's Women's Leadership Fund requires a minimum investment of $100,000 and will invest only in publicly traded companies. The firm says that 20 percent of the fees will be allocated to charitable donations for underprivileged women.

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Comments

[Democratuser]

hat tip to http://financeopinionss.blogspot.com

lets get unemployment benefit extension passed

[truthmatterstoo]

Just because a woman in a CEO or on the board of Directors doesn't mean the company is being run with anymore humanity . anyone recall Carly Fiorini?

[qdyf]

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[VoteDemocrat]

How do we hold wall street accountable? NO matter what Obama & his team tires to do the bankers always find a way to evade it.

as stated by http://financeopinionss.blogspot.com it is time to create economic growth that we can all benefit from; not the top 1% of earners. An equitable economy is a better one.

A second stimulus centered around job creation is needed since the first one didn't contain enough shovel ready or green jobs provisions.

[mountainweb]

Basing investing solely on the fact that a company has female executives will, in the long run, lose money....

[thebigbike]

Take Carly Fiorina, anyone? PLEASE!

[Pillar-of-Autumn]

There is strong reason to suspect that more women in positions in power in the financial sector will be better for us all because they are generally more risk-averse than men. Men have been sexually selected for risk-taking and high-stakes performing by women for centuries. I am unscientifically certain that the crisis would not have been so catastrophic if women had been running the show. (i'm a guy)

[econ1]

Sorry it is in Switzerland. Don't know if that is okay there.

[econ1]

Isn't it illegal to base decisions on race, creed, religion or gender?

[laaambchop]

nope

[HarlowGal1960]

once again, the best man for the job is a woman

[HarlowGal1960]

once again, the best man for the job is a woman.

[wizegeye]

Whether a woman can do a better job than a man in leading an organization can be debated, however, according to a survey released Monday by the Corporate Library, female CEOs were three times more likely to have their pay cut than male CEOs last year. Also, female CEOs made 58% of what their male counterparts earned, and their compensation was down by a median of 18.5%, the survey found. Even when a woman rises to the highest position in an organization, often times she still doesn't receive the same compensation as her male counterparts. I guess we shouldn't be surprised, but it's unfortunate that the business community has not made more progress than it has in this area.

http://www.reuters.com/article/ousiv/idUSTRE59P4QE20091026

[sabredance]

Interesting. That pay difference may also contribute to the better performance of companies with female officers -- more money for R&D, reorganization, refinancing, etc, etc.

[DosGatos2]

Perhaps the study, forgot to examine the tenure of Carly Fiorina at HP.

Gender alone will not determine who is a good leader and who isn't.

[HamletsMill]

Yep. She ran everything she touched completely into the ground. Clueless. She was not a tech head. She was an over confident Johanna-One-Note sales obsessive. That was fatal in a premier tech company like HP. Does she still want to be Governor of California?

[nellyb stl]

"Western Women will Save the World." -His Holiness the Dali Lama
"If Women Ruled the World there would be no War." -anon
Warning: Don't buy any FUND (women or men ceo) unless you have a vote in what they are investing in. Funds got us where we are today; not Exxon, etc.

[deeppeace]

My purely subjective observation, without a shred of science to back it up, but here goes:

In my experience, men are wired to hand off tasks to 'their people;' they buddy-up with people (men) of like minds and seek solutions that favor themselves and their businesses without trying to be creative.

Women, traditionally have had to get the job done with whatever's left over. That means finding new ways to get things accomplished and relating to people in the best way to make that happen. Women have had to multi-task all their lives, while making sure Daddy/hubby/boss isn't inconvenienced. They've learned, better than men have (in my opinion), that actions have consequences, and so have learned how to anticipate the ripples their pebble will evoke.

Again, this is totally subjective, but is based on forty years in the workplace.

I do wonder what the next generation of women - who have sweepingly different experiences and histories - will produce. It's good and right to be treated equally with men in similar situations, but I would be disappointed if they started behaving like them!

[HamletsMill]

I tend to agree with your observation.But I think the recent decade of obscene corporate derangement has even skewed this factor. The best middle managers I have ever seen in my life were women. But at the top I think our current corporate quarterly profit idolatry has ruined the judgment and business acumen of everyone. It was beyond shameful. There was no courage. But we shall see what the future brings. Certainly women such as Elizabeth Warren and Brooksley Born are hands down the most courageous people to have appeared in this current unbelievable mess.