Fewer than one in seven partners at hedge funds and private equity firms are women, and progress towards equality is slow.
According to a report based on Financial Conduct Authority data, out of 9,957 partners at private equity firms, hedge funds and other financial services companies only 1,381 (14%) are women.
The percentage has increased by only 2% in the past five years despite a plethora of initiatives to increase the participation of women in top finance roles, including the government’s women in finance charter.
A 2013 survey by the accountants Rothstein Kass revealed that hedge funds run by women were more successful than those run by men every year over a six-year period. Despite this, men hold 80% of roles in hedge funds.
Nicky Morgan, the chair of the Treasury committee, said greater gender diversity led to “better financial performance, reduced groupthink and more open discussions”.
“The women in finance charter has been effective at raising awareness on gender diversity, but as this sluggish progress shows, there is still a considerable way to go,” she said. “As the Treasury committee’s report on women in finance concluded, one of the next steps must be for firms to set out how they will support the progression of women.
“Firms should focus on changing the culture in financial services firms, which remains a deterrent for women, especially the bonus culture.”
Most firms in the sector are too small to be covered by the gender pay gap reporting rules that were introduced this year, while the UK pay gap reporting rules do not cover partners, said Dean Fuller, a partner at the law firm Fox & Partners, which released the data on equality.
“Raised awareness of workplace discrimination means that firms need to consider what they can do to redress the balance,” he said. “These figures show that efforts to increase diversity have not gone far enough. Historically, private equity firms and hedge funds have been male-dominated, and there has been little progress made on increasing diversity over the past five years.”
This year, the firm revealed that the gender pay gap was 91% for people earning £1m or more annually in UK financial services companies, and the gulf was increasing.
It found that the average gap between what men and women are paid in the financial services sector was 22%, and 46% for bonuses, while the average gap for the UK overall is 9.7%.
There are 4,600 men earning more than £1m in the sector, against 400 women, according to the firm. The gap has widened by 17% over the past five years, from 3,600 in the 2010-11 financial year.
Fox & Partners warned private equity firms and hedge funds that a lack of diversity in the workforce exposed them to legal risks. A group of women recently filed a class action suit against Goldman Sachs in the US, accusing the firm of discriminating against them in promotions, pay, and performance reviews.
Fuller said smaller private equity firms recruited mainly through their own networks as many did not have significant HR departments, and that reduced the potential pool of candidates.
“While recruiting beyond immediate contacts can be more expensive, having a diverse employee group is likely to be a significant benefit in the long run.”