Barclays Capital, the investment banking arm of UK bank Barclays, has produced a report entitled Affirmative Investing: Women and minority owned hedge funds, which finds from survey results that funds managed by these groups in the USA produce better returns.

The BarCap survey is based on a sampling group of 22 firms, which BarCap estimates is 13% of the women and minority-owned hedge fund universe in the US. As the survey points out: "Qualifying as a women or minority-owned fund is very precise and can be derailed by initial seeding or funding options if a manager isn’t very careful."

The designation of minority is provided by the US Small Business Administration. To be certified as a minority business, the fund must be at least 51%-owned by a minority individual. Further, the management and daily operations must be controlled by those minority group members.

A minority group member is an individual who is a US citizen with at least 25% of the following: Asian-Indian; Asian-Pacific; black; Hispanic; native American. To be certified as a women-owned business, the fund must be at least 51% owned by a woman or women who are US citizens.

It is worth noting this is a US-centric survey and therefore does not include Asian fund managers based in Asia, be they local Asians, returnees or foreigners.

In the US, women and minority-owned funds might receive special treatment. The Illinois State Board of Investment last year voted to ‘establish concrete goals’ for investing in women and minority-owned funds.

On the other side of the coin, some feedback is that being a member of a minority or being a woman has not been an advantage. One of the respondents observes: "We have never gotten an investor meeting or allocation based on being a woman-only fund, despite all the press this topic is receiving."

Another respondent to the survey made the contrarian remark: "Investors need to look beyond sex/minority status and compare on merit alone."

According to the survey, single-manager hedge funds run by women and minorities generated a cumulative return of 82% for the last five years, compared with 51% for male, non-minority funds.

For fund of funds’ returns, it is a 39% five-year return for the women/minorities team and 11% for the others.

The report concludes that such groups produce better hedged returns because they are ‘more risk averse’. However, there is a possible downside to that: if women are in fact more risk averse, do they feel disinclined to launch a hedge fund in the first place?