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With this blog we hope to shed some light on our thoughts, practices, research and views – how we can help overcome the challenges ahead and at the same time find opportunities for investment.

  • Writer's pictureElina Kovaleva

Women in Hedge Funds - a personal view

Only 20% of hedge fund staff is female and the proportion of women in investment roles is only 10% - among the lowest in investment management[i]. Women control less than 1% of the $3tn in assets managed in the hedge fund industry[ii]. Many of my female counterparts will attest to these statistics with their own anecdotes; my personal record was a meeting with 50 people where I was the only woman. I have been on the other side of the problem, too, when going through countless CVs I was surprised to find a very low proportion of female candidates.

Is that even a problem? Does gender diversity improve returns? Evidence shows that companies with female representation on the board tend to outperform those without[iii]. Are hedge funds any different? Bloomberg’s HFRI’s Women’s Index has substantially outperformed the broader industry index since 2007 (see chart below). Some studies[iv] have found, on average, no difference in performance between women- or minority-owned funds and the rest of the sector. However, the same study found that women- and minority-owned funds were over-represented in top quartile of performers. One of the issues is that we simply do not have enough data to analyse comprehensively: disclosure tends to be poor, and sample sizes small.

Performance is a key parameter and the goal should be to put women in a position to show what they can do. It is hard enough to find talented investors. By encouraging more women to try, the whole industry would benefit from an increased talent pool.

So where does it start? My conviction is that we should first address the root of the problem: fostering more entry-level candidates. I am very passionate about volunteering as a mentor and presenter at schools to encourage girls to take Maths and Science at A-Level and University. The whole Velox team participated in a broader mentorship programme in 2020 which we all found rewarding from so many angles.

My personal experience is that mentorship and female network become even more important for junior and mid-level employees. There are plenty of myths about the world of hedge funds in popular culture, fostered by movies and TV series. Dispersing some of those common misconceptions could go a long way in encouraging women to ‘take a plunge’ and apply for a hedge fund role.

Like in many other industries, there is evidence of a glass ceiling: women make up 29% of junior hedge fund employees, but just 11% of senior staff[v]. This is possibly the hardest issue to nail down, and investment management is not alone in grappling with the problem for years. Culture of gender diversity at all levels and comprehensive benefits packages should be prioritized as strategic initiatives. When Velox was reviewing the benefits package and invited comments from staff, the firm ended up improving maternity cover based on comments from employees. Creating a culture that not only allows, but encourages, such feedback is what the industry should continue to strive for.

Things are starting to change. The benefits of diverse thinking are being recognised, regulators and investors are demanding better gender balance, and the hedge fund industry is embracing diversity initiatives. We have the power to shape the future of the industry, create more diverse workplaces and improve returns. And, hopefully, somewhere along the way yet another girl will find her dream job. Like I have.

[i] Prequin, Women in Hedge Funds, 2019 [ii] Knight Foundation, Diversifying Investments, 2019 [iii] Investment Management Consultants Association, The Relative Stock Performance of Gender-Diverse Boards, 2017 [iv] Knight Foundation, Diversifying Investments, 2019 [v] Prequin, Women in Hedge Funds, 2019



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