The push for greater gender diversity in Asian asset management is set for a major boost thanks to a new Indian initiative that has drawn support from several US and Canadian pension funds and now looks likely to be expanded across developing markets.
The move is timely given the lack of boardroom diversity generally, not least in Hong Kong, where female representation continues to lag other parts of the region.
The four-week pilot project undertaken by the CFA Institute in Mumbai, which concluded on Friday, gave 49 young women the chance to gain internships within India’s asset management industry. The idea has since been adopted by some of the world’s largest asset owners who want to do more on this issue, it was revealed at last week's G7 meeting in Canada.
Women remain under-represented in senior corporate management across Asia, with Hong Kong identified as lagging in terms of corporate boardroom representation.
The CFA Institute’s managing director for Asia Pacific, Nick Pollard, told AsianInvestor that the relatively low number of women who choose careers in investment management is at least partly because “it has been a male-dominated profession and we’ve been really poor as an industry at advocating for change.”
As part of its own efforts to encourage greater diversity – the institute will this year have a board comprised of more than 30% women – the CFA has turned an idea from the local team in India into the ‘Young Women in Investment’ programme.
“A member of our society in Mumbai wanted to do something proactive on gender diversity in India, where less than 8% of senior roles in asset management are held by women,” Pollard said.
The idea was for a ‘boot camp’ where recently-graduated women from diverse backgrounds could get an introduction to investment management. At the end of the four-week boot camp, the 49 women will have a paid internship with one of the top investment management houses in India for three to six months.
Pollard said the idea is unique “and it took this one individual’s persistence and energy to get it underway.”
The idea came to the attention of Canada's pension fund community. "They found out about what we were doing and got behind the idea," Pollard said.
At last week's G7 meeting in Quebec, it was announced that various US and Canadian pension funds would combine with other pension funds across the G7 to develop the CFA's idea in other developing markets.
The pension fund asset owners include CalPERS, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System and Ontario Teachers.
Pollard said the asset owners would help the CFA assign people to work on developing a global bootcamp/intern programme based on the India pilot scheme "and over the next three years we will scale that out into other markets." He said it is too early to say where the next markets will be.
HONG KONG LAGGING
"Where are all the women in asset management?" was a question posed at AsianInvestor's recent Asian Investment Summit in Hong Kong. A panel of women discussing their experience included Jayne Bok, head of investments Asia at Willis Towers Watson, and Fern Ngai, chief executive of the Hong Kong not-for-profit organisation Community Business (CB).
They mentioned the global initiative known as 'The 30% Club', which has, for example, introduced targets for Hong Kong-listed companies to collectively reach 20% women on their boards by 2020, working toward a long term goal of 30%, and to reduce the number of all-male boards to zero by the end of 2018.
The CB 2018 survey, with data collected as of January 2 this year, analyses the performance of 51 Hang Seng index companies. Out of a total of 632 directorships on the HSI, 87 are held by women, an increase from 12.4% to 13.8% since 2016. Meanwhile, the number of all-male boards has decreased from 11 to 10, so well short of the target for the end of this year.
“These are positive steps, said Ngai, “but this is a far cry from the voluntary targets set by the 30% Club. There’s been a paltry 4.9% increase (of women on boards) since 2009. At the current rate, we estimate that it will take four years to achieve these targets and 26 years to reach parity.”
Ngai told AsianInvestor progress is being driven primarily by the actions of a few, with the majority of boards – 34 out of 46 companies – showing no improvement in gender diversity.
“Hong Kong lags behind other markets like the UK, which is at 28% and is targeting 33% by 2020. Australia and Canada are at 26% and the US is at 21%,” she said.
Across the wider Asian region, the Community Business research shows an improving trend, notably in Singapore, Malaysia and India. Ngai said Hong Kong risks being left behind if it continues its slow trajectory.
She said the main reason why progress on gender diversity has been slow in Hong Kong is because companies don’t recognise that gender diversity is good for business. "They still recruit directors from their network – it’s an old boys club,” she said.
Proponents of greater diversity contend that a board that has a diversity of perspectives is going to be better at making decisions, in managing risks and in representing the views of its stakeholders.
Among them is Helen Rowell, deputy chairman of the prudential regulator APRA in Australia.
“Our large superannuation funds, as active shareholders, are increasingly pushing corporate Australia to tackle the diversity question head on, arguing that diverse groups generally provide better outcomes than non-diverse groups," she said in a speech last November. "In this light, it’s hard to imagine that the industry itself will not continue to improve the diversity on its own boards.”
Elsewhere, US financial services group State Street has made board diversity a key focus of its corporate governance policies, voting against companies that have no women on their boards.
However, the better-performance argument in favour of greater diversity is not borne out by the (admittedly short-term) performance of State Street's Gender Diversity Index ETF. Since launch one year ago, the ETF has underperformed the MSCI USA Large Cap Index, returning 15.6% compared to 17.3%, FactSet data shows.