Guest Author - Guido Deboeck

In the two articles on Best Jockeys (domestic and overseas) 18 investment managers are listed, none of which is a woman? How come? How come there are no women among the top best investment managers?

Actually in the list on domestic managers there is one. Although not listed in the top ten, Judy Vale, manager of Neuberger Berman Genesis (NBGNX) shows up 19th out of 25 funds selected through the criteria specified in Best Jockeys. Year-to-date her fund is up 8.27% versus 5% for the S&P500; her 3 year average annual return is 22.1% versus 14% for the S&P500.

Judy runs NBGNX since 1994 and was joined in 1997 by Bob D’Alelio. Together they focus on small stocks that dominate the market and generate strong free cash flow. Energy stocks have been the main driver behind their performance. Their fund has been one of the small-blend least volatile over the past decade. Most of Judy’s and Bob’s favorite stocks are steady performers that they manage with low turnover. The only caveat is that Judy’s fund has been closed to new investors since December 2001 and isn’t likely to reopen any time soon.

There are many more women running mutual funds and/or investment portfolios, some of which can be found in the Morningstar Fund 500 list, but under the strict criteria set for selection of The Best Jockeys only Judy Vale appears.

When it comes to investing does gender have an influence? About a year ago, Merrill Lynch released the results of a survey that aimed at answering this question. A couple of the highlights from the press release of April 18, 2005 provide insights of the main survey findings:
- women make fewer investment mistakes than men and make them less often;
- on average women tend to know less about investing and enjoy investing less than men;
- women are more likely to be reluctant or unprepared investors, while men are more likely to be competitive or measured investors.

The survey provides many more insights (see related links) but its overall value can be seriously questioned based on how you judge the overall survey sample size (500 men and 500 women without further classification by income level, investment experience, or even investment approach), the sample criteria (participants had to be solely or jointly responsible for investment decisions and have at least $75,000 in investments and annual household income of at least $75,000), the quality of the survey questions (all binary questions with yes or no answers only) and the quality of the analysis (which given the binary nature of the survey produced only percentages, not a great deal of refined conclusions).

The most important result of this survey for Merrill Lynch was probably that “Women are more savvy about investing {than men}. If a women isn’t a financial expert she’s going to seek and heed professional advice” said Caroline Gundeck, Director of Women’s Business Development of Merrill Lynch. “We have found that women want to work with an advisor to build a long-term financial plan.”

Carolyn forgot to point out that most financial advisors at Merrill Lynch still are men -- including probably ones that make the more mistakes -- and that among all the investment funds Merrill Lynch is managing there is only one that is covered by Morningstar 500 Funds i.e. Merrill Global Allocation, managed by Dennis Stattman whose 3 year annual average return is lower than Judy Vale. In sum, the survey was self-serving for Merrill Lynch!

In my opinion, gender differences should not have an influence on how well women investment managers can do, nor on anyone’s capability to manage an investment portfolio according to personal satisfaction.

The key to greater financial independence is really increased financial literacy, a desire to learn about investing and financial markets, and a willingness to acquire essential skills to achieve personal goals and meet performance standards your like to set for yourself.