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How Women Will Make History at Warren Buffett's 2019 Berkshire Hathaway Weekend

This article is more than 4 years old.

At last year’s Berkshire Hathaway meeting in Omaha, three women met and wondered out loud why female investors were so underrepresented in the conferences and meetings of one of the premier investing events of the year.

But it wasn’t just in Omaha that female investors were missing at the table. At a time when women are making substantive progress in many fields, two statistics underscore the problems faced by female-owned investment companies. First reported in a landmark study by the Knight Foundation “Ownership Diversity in the Asset Management Industry” these are:

  • Among all investment companies operating in the U.S, only about three percent are owned by women.
  • The total value of Assets Under Management (AUM) controlled by female investors, represents only one percent of all U.S. investment company AUM.

So Kim Shannon, the founder and CEO of Sionna Investment Management, LJ Rittenhouse, Berkshire author, financial analyst and inventor of Candor AnalyticsTM and Barbara Ann Bernard, the founder and CEO of Wincrest Capital, decided to do something.

©2019 Rittenhouse Rankings

To raise awareness about the gender bias gap in the investment sector – possibly one of the biggest (and most ignored) gaps in business – we would host the Variant Perspectives Conference in Omaha around the 2019 Berkshire Hathaway meeting weekend and explain why this gap persists. We would present the case for growing AUFM:  Assets Under Female Management.

Why are female-owned investment funds so underfunded both in numbers and in investable capital? Is it because female investors underperform male investors? A vast body of research dispels this myth.

In 2018, The Wall Street Journal reported that among the 50 largest U.S. hedge funds, only two were run by female executives. And yet, this same report confirmed that the 2017 year-end returns generated by female-owned hedge funds were the same or superior to male-owned hedge funds.

Last May, we thought this conference was an audacious idea. Today it appears that conversations about gender bias in investing are reaching a tipping point. Here are recent landmark studies:

In December, Morgan Stanley published an in-depth study led by Carla Harris, Vice Chair of Wealth Management on The Growing Market Investors Are Missing – The trillion-dollar case for investing in female and multicultural entrepreneurs.

These researchers evaluated how firms led by women and people of color are consistently underfunded. They wondered if it is because most asset allocators and investors are white men who “are twice as likely to think that female and minority-owned businesses perform below the market average compared to non-minority, male-owned businesses.”

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But this underfunding perception did not hold up. In fact, the researchers found that not only did returns generated by multicultural-owned investment firms match market returns, but also that female-owned investment firms produced returns that beat the market by 2 percent annually.

These findings are supported in a May 2018 report by the Boston Consulting Group “Why Women-Owned Startups Are a Better Bet.

Here, researchers found that women-led startups generated more than two times the amount of revenue per dollar invested than did comparable male-owned startups. And yet – even with results such as these – they found that female-owned early stage start-ups received, on average, $1 million less than a comparable male-owned start-up.

What can CEOs, boards of directors and investors do to promote more diversity, accountability, and also generate superior results? How and where are we seeing change today?

The Knight Foundation once again is leading the way. Since 2010, the Foundation has increased its holdings in female and diverse asset management funds to over 20 percent of their current total endowment.

Another initiative that is changing minds and practices is the Canadian Gender and Good Governance Alliance. It is a partnership of leading non-profit organizations that represent over $4 trillion in assets, 5 million employees, 200 CEOs, 13,500 board directors, and, also government representatives and regulators.

In 2017, the Alliance published a ground-breaking document: The CEO Blueprint: How to Build and Lead Gender-balanced Organizations. The report recommends that boards work with management 1) to integrate the gender initiative with the business strategy; 2) to set targets and regularly remeasure progress; and 3) to build awareness throughout the organization and tie compensation to goal achievement.

Why does gender balance matter? The research is clear:  we invest in people we trust, and most often the people we trust are those who look and think like us. If we want to support women-owned businesses, we need more female investors and female-owned investment companies.

The challenge to grow female-owned investment firms was evident in February when I attended the Columbia Business School’s prestigious two-day Value Investment conference. When moderator Jason Zweig asked the women in the audience to stand up, it appeared that among the 400 or so attendees, only a few dozen were women. Then Zweig asked these women if they intended to make investing their career. Only a few raised their hands.

How can this change? At our conference next month in Omaha, we will network, discuss and recommend strategies to boost AUFM.

© 2018 Bloomberg Finance LP

Melinda Gates cares about this issue too. Recently, she tweeted “Bias can be woven into the fabric of an organization or designed out of it… When women control the money, female founders get funded. Amen.”

If you are in Omaha for the Berkshire meeting, come to our Variant Perspectives Conference on May 3.