A theoretical and quantitative study of gender bias and managerial structure effects on flows in the hedge fund industry

Abstract

Gender inequality has long been an economic issue prevalent in the financial sector, especially in the hedge fund industry. Using hedge fund data from 2000 to 2019, we study the effects of managerial gender on fund performance, risk taking, and flows to draw a conclusion as to whether investors exhibit gender bias when investing in hedge funds. We take this study a step further by also analysing the effects of managerial structure on hedge fund performance, risk, and flows, and therefore concluding whether hedge fund investors have a preference when investing in team or solo managed hedge funds. This paper concludes that managerial gender and structure have no effect on the flows of hedge funds. In order to consolidate this study, the Safe Haven effect is also explored, which states that the presence of at least one female in a team managed fund leads to higher risk-taking tendencies due to the ‘safe’ environment created by female managers. This study concludes that there is sufficient evidence to prove that the Safe Haven effect holds within hedge funds.