MFDV Study – Affirmative Investing:Women and Minority Owned Hedge Funds – Prime Services-June 2011


BARCLAYS CAPITAL STUDY HF-Pulse-Affirmative-Investing-June-2011-Letter

THE ABOVE STUDY COVERS:

Affirmative Investing: Women and MinorityOwned Hedge Funds

In recent years, there have been an increasing number of pensions and other

institutional investors who have expressed interest or started investing in women and

minority owned investment companies. Indeed, such investing is now mandated for

public pension plans by several states, including Ohio, California and Illinois. However,

the debate over these practices remains fierce, while the number of women and

minority owned funds continues to be relatively small, even as demand increases.

This paper attempts to answer some of the practical, performance- and risk-related

questions surrounding women and minority owned hedge funds, including:

• What is the rationale behind launching a women and minority owned investment company initiative?

 • What are some of the objections to “affirmative investing”?

 • What is the potential growth in AUM of women and minority owned hedge funds?

 • What does the universe of women and minority owned hedge funds look like?

Can supply meet demand? 

 • Is there a performance differential between women and minority owned hedge funds and the full hedge fund universe?

 •Are there differences in volatility and “risk” within the women and minority owned hedge fund universe?

Why is the universe of women and minority owned hedge funds relativelysmall?

  •Are there advantages to being a woman or minority owned hedge fund?

 •What are the particular challenges faced by women and minority owned hedgefunds?

 • Who are the primary investors in women and minority owned hedge funds?

 Conclusions

Given the strong performance and risk-reward characteristics of WMOHFs, it seems

reasonable that institutional investors would want to consider making an investment in

these funds. However, size and supply can be an obstacle. For institutional investors

considering a diversity program, one of the common avenues is to first establish an

emerging manager platform. Due to their smaller size, it is unusual, although not unheard

of, for a WMOHF to qualify for investment within in the main portfolio of a pension.

For women and minority owned hedge funds, the marketing environment certainly appears

to be heating up. Whether a fund chooses to make a play based on its woman or minority

owned status is up to the individual fund, but coupled with a strong track record and

infrastructure, such a designation could be beneficial in getting a foot in the door with

investment decision-makers.

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About carlarweir
I am a Cross Asset FIX Connectivity SME working for international banks. i also sit on the FIX Protocol Ltd Global Steering Committee, and am Co-Chair of the Global Cross Asset Committee. I also have a very strong background in Mobile Telephony, Cloud computing, SaaS, IaaS, PaaS, Big Data, innovation, and am a pioneer in Pseudolite technology.

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