When Britain’s Parliamentary Commission on Banking Standards recently opined that male-dominated bank trading floors would benefit from more women, it echoed UBS investment bank head Andrea Orcel, who’d told the commission that a dearth of female top executives had endangered his firm. Both assertions reflect a popular theory that women make better investors because they take less risk. Roseland, New Jersey–based professional services firm Rothstein Kass supports the case for gender balance with its Women in Alternative Investments Hedge Fund Index, which gained 6 percent annualized for the six and a half years ended last June 30, versus 3 percent for the HFRI Fund Weighted Composite Index. But that kind of outperformance defies easy explanation, contends hedge fund manager Jill DiLosa, founder of the New York–based Vanna Partners Fund: “There’s such a limited data set, it’s hard to know.”
Behavioral economist Anna Dreber Almenberg, an assistant professor at the Stockholm School of Economics who studies gender differences in risk-taking, wants policymakers to think twice about mandating greater female representation. Although men take more financial chances than women on average, Dreber Almenberg notes, that finding doesn’t account for the possibility that trading attracts risk-tolerant people of both sexes: “Personality traits might be more useful to focus on to fix problems related to traders, rather than just thinking about gender.” • •
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