Hedge Funds: It's Still a Man's World

Apart from stellar performance, what makes Chilton Investments stand out? Its many female execs -- a rarity in an industry still almost exclusively male

By Amey Stone

Jennifer Foster, senior analyst at Chilton Investments, hadn't been in the hedge-fund business for long when she noticed that she was one of just a handful of women among a sea of men attending investment meetings on Wall Street. "It struck me that these meetings weren't as balanced as what I saw in our own firm," she says.

That's an understatement. Chilton Investments, which manages $3 billion and is presided over by veteran hedge-fund manager Richard Chilton, boasts a ratio of female executives many times higher than that of most investment firms -- let alone the notoriously clubby and male-dominated hedge-fund business. Women make up 54% of Chilton's 75 employees, including 41% of those ranked vice-president or above, according to the firm. The research department is 45% female. One of its co-chief operating officers is a woman, as is the research coordinator.


  No industry figures are available for the number of women in hedge funds, which operate as private, mostly unregulated investment pools for the very rich. The name of an all-female industry association, 100 Women in Hedge Funds, suggests there aren't many -- even though there are more than 6,000 hedge funds operating in the U.S., managing about $650 billion in assets. Lee Hennessee, founder of Hennessee Group, a New York firm that advises investors on choosing hedge funds, estimates management ranks in the hedge-fund industry are about 7% female, and that women may represent just 1% of women in the No. 1 or No. 2 spots. Research firm Catalyst found in 2002 that, overall, women make up 11% of the security industry's senior executive positions (see BW Online, 11/17/04, "You've Got a Long Way to Go, Baby").

The high ratio of women at Chilton is especially noteworthy because founder Richard Chilton is part of a highly elite (and all-male) group of long-term, successful hedge-fund managers. With offices in New York and Stamford, Conn., his firm now manages assets in four different long/short strategies (they pick some stocks they think will go up; others they expect to decline). Chilton's flagship U.S. long/short portfolio has returned an annual average of 19.2%, net of fees, since inception in 1992.

Foster, who is 34 and has three sons under 5, says Chilton doesn't have a mission to hire a lot of women. The high percentage of women stems from the firm's practice of recruiting top students from business schools (she was recruited from Harvard Business School in 1997).

"We go out and hire the best people we find on campuses and try to groom, retain, and train them," she says. "We are the ultimate meritocracy." Of her boss, who wasn't available for an interview, she says, "He is the ultimate in my mind of a fair judge of someone's ability to contribute."


  The result is a culture that she describes as not only balanced between women and men, but very supportive of the women who work there. Also, she says, the emphasis on performance rather than face time, means there isn't pressure to attend industry parties or weekend golf outings that can eat into family time. For workers with children, that can be a relief, she says. "For me and the other women working here," she says, "it is a nice place to come to work every day."

Wall Street in general is male-dominated, with hedge funds attracting "the most competitive, ambitious, and driven of the lot -- and let us not forget egotistical," says one woman in the hedge-fund industry.

Most hedge-fund managers come out of the proprietary trading desks at Wall Street firms, where women are especially underrepresented, says Peter Rajsingh, senior vice-president of Global Partners Group, a firm that manages and markets funds made up of other funds, also known as a fund-of-funds. "That same metric bleeds down into the hedge-fund arena," he points out, adding that only 2% of applicants to an incubation program his firm runs for new hedge-fund managers have been women.

Most women in high positions at hedge funds are involved in marketing. "It would be nice to see much more of a balance between women in the investment side and marketing side," says Anne-Marie Sasdi, president of Fortune Asset Management USA, another fund-of-funds operator.


  Hennessee commends Chilton for his strong record of hiring and promoting women, but says she would like to see more women succeed at launching their own hedge funds. She says she isn't surprised that a successful manager like Richard Chilton has learned to tap the often-overlooked skills and experience of women on Wall Street. "A lot of people say, and I believe it, that successful women on Wall Street work twice as hard and get paid half of what men get," she says.

Foster, for her part, isn't complaining. One point she was sure to emphasize: "We have a lot of great men who work here too." Yes, but for the hedge-fund industry -- and especially the elite ranks of successful long-term managers -- the presence on the premises of lots of smart men is hardly as notable as having lots of smart women.

Stone is a senior writer at BusinessWeek Online.

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