International Women’s Day: How female fund managers invest

It's no secret, the investment industry is run mostly by men and the gender imbalance remains a stubborn problem, alongside a troubling lack of diversity in general. 

But are investors missing out as result, and could female fund managers deliver better returns? 

Research from Willis Towers Watson shows investment teams which rank in the top quartile on gender diversity outperform those in the bottom quartile by 45 basis points per year. Data from McKinsey reveals that companies in the top quartile for ethnic diversity are 36% more likely to outperform less diverse peers.

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With this in mind, we share the investment perspectives of four female fund managers this International Women’s Day. They’re keeping their eye on some interesting areas of the market – from finding contrarian opportunities in unloved UK equities, to capitalising on a favourable economic backdrop in Japan.

Here’s what Fidelity’s Becky Qin, Invesco’s Beth Shard, Columbia Threadneedle’s Tammie Tang, and abrdn’s Abby Glennie had to say.

Investing in Japan 

Becky Qin at Fidelity, says...

“An area of the market that we believe could perform strongly this year is Japanese equities, due to a number of cyclical and structural reasons”, says Becky Qin, co-portfolio manager of the Fidelity Global Multi Asset Income Fund. 

Japanese equities have recently soared to a record high. Japan’s main stock market index, the Nikkei 225, surpassed its December 1989 peak on 22 February, but many experts believe the market still offers good value. 

In terms of the economic outlook for the market, Qin is optimistic. 

“In the near term, Japan’s economy looks resilient. Economic surprises and earnings revisions have been positive, and business activities continue to recover, with the services sector in particular being supported by growing tourist flows”, she says. 

The economic backdrop in Japan is starkly different to that in most other major economies. 

While most central banks have hiked interest rates over the last couple of years in a bid to tackle the highest inflation for a generation, Japan’s central bank has taken a different stance in light of the deflation problem it has struggled with since the 1990s. It has had a negative interest rate policy since 2016. By contrast, the base rate in the UK is currently 5.25%. 

“We do believe the Bank of Japan will begin to normalise policy this year, however it appears to be in little hurry to significantly adjust its accommodative stance”, says Qin. 

What’s more, “the Ministry of Foreign Affairs is actively courting more foreign direct investment into Japan. These structural factors suggest Japan could experience a more positive inflationary environment than has been the case for the previous few decades,” Qin says.

“In addition, despite the market’s recent strong performance, foreign and domestic flows have only begun to gather momentum and have plenty of headroom to grow. Likewise valuations [...] have only returned to pre-Covid levels [and] solid earnings and improving inflation prospects mean these too have room to improve”, she adds.

On top of this, the Tokyo Stock exchange has recently initiated a series of corporate governance reforms, which could boost the outlook for the market even further. 

These are “aimed at improving capital efficiency and boosting shareholder returns in Japanese companies”, Qin explains. “Progress has been mixed so far, but we believe that pressure is widespread enough to ensure lasting change.” 

Finally, Qin highlights one more positive trend to watch this International Women’s Day – more women entering the workforce. 

“Positive wage growth, driven in part by more women entering the labour market and companies increasingly willing to compete to hire the best talent, is another long-term trend that should encourage spending and consumption patterns to shift in a business-friendly way”, she says. 

Fresh opportunities in the UK

Invesco’s Beth Shard, says...

The UK equity market has been unloved by some investors in recent years, but Beth Shard thinks investors need to take another look. 

“For investors scouring global markets for fresh investment ideas, the UK market is a great place to start. UK valuations are looking very attractive, particularly when compared to many other major global markets”, she says. 

Indeed, UK equity valuations have lagged behind their international peers since the Brexit Referendum in 2016, which is creating the opportunity for investors to buy companies up at bargain prices.

This can be particularly beneficial if you’re looking to add some strong diversification to your portfolio, in Shard’s view, as “the UK provides investors very different sector exposures to the US, as well as Europe”. 

“The diversification benefits that come from being different can be really important to investment portfolios”, she adds.

Another attractive feature of many UK-listed businesses, in Shard’s view, is that they operate globally. This means that, when you buy a stake in them, you are actually gaining exposure to a global opportunity-set. 

This will come as good news to investors who are interested in investing in the domestic economy, but have been put off by recent headlines about the UK dipping into recession in the final three months of 2023.

“It is often overlooked that only around a quarter of revenues of UK listed companies actually come from the UK. Put another way, the UK is really a global market that looks attractively valued”, she says.

Looking forward, Shard is optimistic about what the UK equity market can offer investors.

“I am most excited by the weight of cash generation, and the likelihood of returns to shareholders in the form of both dividends and share buy backs. The real cash returns expected across a number of sectors – including banks, utilities and energy companies – are often underappreciated”, Shard concludes.

Indeed, all five major UK banks released their results in February, announcing a generous mix of dividends and share buy backs.

Opportunity for impact investors

ESG funds have come in for some stick in recent years. 

Those that have an environmental focus have largely underperformed in the last two years, as Russia’s invasion of Ukraine caused oil and gas stocks to soar. 

Meanwhile, fears of greenwashing have caused some investors to become disillusioned with the concept – something the FCA is trying to clamp down on with its new Sustainability Disclosure Requirements.

Despite this, not all ESG funds are made equal. 

There is a large range of funds on offer, from those which simply exclude harmful industries to those which seek to bring about a positive impact. As well as funds which focus on the environment, there are some which place an emphasis on the social or governance factors – as well as those which combine all three.

Despite a rocky couple of years, ESG funds remain popular with investors – and some have managed to either match or exceed the performance of non-ESG peers.

Tammie Tang, fixed income portfolio manager at Columbia Threadneedle, believes that the bond market is a good place for investors to look if they want to combine both financial and ESG goals.

Tang leads Columbia Threadneedle’s social bond strategies, including the CT UK Social Bond Fund (launched in 2013) and the CT (Lux) European Social Bond Fund (launched in 2017). 

Tammie Tang at Columbia Threadneedle, says...

“Impact investments are made with the intention of generating positive, measurable social and environmental impact. And that’s what the UK Social Bond Fund has done since launch in December 2013”, she said. 

“We have proven that it’s possible to target both a financial return in line with high-grade credit and, simultaneously, positive impact for society and for people,” Tang added.

Investing UK small caps

abrdn’s Abby Glennie, says...

Also positive on the domestic market is Abby Glennie, deputy head of smaller companies at abrdn. 

“Although headlines will tell you UK markets are out of favour and bids are worryingly shrinking the market, we remain in positive spirits about the quality and breadth of businesses we are investing in”, she says.

“In fact, we’ve added more new ideas to our UK small cap portfolio in recent months than for some time”, she adds. “These are varied across industries and geography with some fantastic UK focused businesses as well as some real global leaders”. 

In terms of sectors, Glennie is interested in opportunities in travel, shipping, house building and food producers.

Within the travel sector, Glennie highlights Jet2 as an interesting company that she’s keeping an eye on. 

“Consumer spending in travel has held strong, evidencing the importance of holidays in peoples’ priorities, and with Jet2 investing in planes, routes and a customer service offering that drives loyalty to brand, we believe they’re well positioned to thrive”, she says.

As far as shipping is concerned, Glennie highlights that decarbonisation agendas could add “further growth opportunities”. Meanwhile, food producers like Premier Foods, Cranswick and Hilton Foods all fall into a “reliable, defensive industry [...which] can deliver consistent returns”.