Citywire Top 20 Female Fund Managers in the US

ISSUE 69 DECEMBER 2019 CITYWIREUSA.COM FOR PROFESSIONAL BUYERS

N EWS ANA LYS I S

NICOLE PIPER

I t is news to no one that asset management has a diversity problem. It is a topic that has drawn an increasing volume of column inches recently. Everyone says the right thing, but how much action is really being taken? Not much, it seems. According to Citywire’s 2019 Alpha Female report, which measures trends in the number of women in portfolio management and the assets they manage, asset managers haven’t made much progress in promoting women. Citywire data show that just 10.8% of all managers in our global database of 16,040 are women. When Citywire’s research team crunched the same numbers in 2016, the figure was just 10.3%, showing meager improvement in a three-year time period. It is not for a lack of talent, however. In an effort to highlight the best female fund managers in the US, we have put together a list of the 20 women with the highest levels of risk-adjusted returns over the past three years. To make the cut, they must also have top-quartile absolute returns in

their particular investment disciplines over that period.

The women come from firms as large as BlackRock and boutiques like Cramer Rosenthal McGlynn. While only two women on the list manage mixed-asset funds, the rest span a range of equity and fixed income categories. Although only a snapshot of

the wider Citywire database, the top 20 list does show that there are top-performing women running money in a wide range of asset classes and categories. Despite this, women are still poorly represented, both in their numbers and the volume of assets they run. Citywire’s Alpha Female report found that the average portfolio size of male managers

Top gatekeepers from Merrill Lynch, Morningstar and Mercer examine why there are so few female fund managers and explain the steps they are taking to incorporate gender diversity into their research processes

DECEMBER 2019 CITYWIREUSA.COM

N EWS ANA LYS I S

TOP 20 FEMALE FUND MANAGERS IN THE US DATA TO OCTOBER 31, 2019 / SOURCE: CITYWIRE DISCOVERY

in our database was $590 million versus $381 million for women. One reason for this disparity is that where there are women running funds, whether solo or in a team, they are often in more niche or capital-constrained categories. This is borne out in the top 20, with nine of the managers running money in regional and sector-focused categories or small caps. Gatekeepers are in a unique position to affect change within the asset management industry, given the scale of their influence on fund flows. ‘We collectively have a responsibility and an accountability to ensure that our pipeline is robust, and I don’t think we see that necessarily,’ said Anna Snider, head of due diligence for the global wealth and investment management chief investment office at Bank of America Merrill Lynch. ‘I think that is really hopeful, it will take time, but the seeds are there.’ MAKING THE CUT Gatekeepers like Snider cannot just pick funds because they are run by women, but they have been searching for ways to incorporate diversity into their manager selection processes. Mercer began incorporating identity diversity into its manager research and ratings process this year. Other firms, such as Morningstar, are starting to figure out how to integrate this research into their processes. Deb Clarke, global head of investment research at Mercer, said the firm conducted research that showed that a diverse portfolio management team is more likely to outperform a non-diverse team. As a result of this, about 20 months ago, Mercer started incorporating what Clarke calls identity diversity into its ratings and research. ‘I think it's fair to say that we believe that if you have a diverse team that has got shared values and goals, then it’s more likely to outperform than a non-diverse team. I think you must have that belief before you start this discussion. Otherwise, you’re ultimately going to just play tokenism to it,’ Clarke said.

TOTAL RETURN

3 YEAR TR PERCENTILE

MANAGER RATIO

RANK NAME

FUND NAME

CATEGORY

TIAA-CREF QUANT SMALL/MID-CAP EQUITY

EQUITY - SMALL-CAP GROWTH

1

PEI CHEN

42.90

0.01

1.58

MATTHEWS CHINA SMALL COMPANIES MARSHFIELD CONCENTRATED OPPORTUNITY

EQUITY - CHINA REGION

2

TIFFANY HSIAO

41.37

0.05

1.40

EQUITY - MULTI-CAP GROWTH

3

ELISE J HOFFMANN

77.10

0.01

1.33

TIAA-CREF EMERGING MARKETS DEBT

BONDS - EMERGING MRKTS HARD CURRENCY DEBT

4

KATHERINE RENFREW

17.43

0.01

1.27

TIAA-CREF EMERGING MARKETS DEBT

BONDS - EMERGING MRKTS HARD CURRENCY DEBT

17.43

0.01

1.23

5

ANUPAM DAMANI

TIAA-CREF INTERNATIONAL BOND MORGAN STANLEY ASIA OPPORTUNITY

BONDS - INTERNATIONAL INCOME

12.76

0.03

EQUITY - PACIFIC EX JAPAN

6

KRACE ZHOU

79.56

0.05

1.17

ALGER SMALL CAP GROWTH ALGER SMALL CAP GROWTH INSTITUTIONAL ALGER SMALL CAP FOCUS

7

EQUITY - SMALL-CAP GROWTH

AMY ZHANG

66.68

0.15

1.00

VICTORY SOPHUS EMERGING MARKETS SMALL CAP VICTORY SOPHUS EMERGING MARKETS PIMCO LOW DURATION INCOME PIMCO DIVERSIFIED INCOME BNY MELLON SMALL CAP VALUE NATIXIS LOOMIS SAYLES GLOBAL ALLOCATION

EQUITY - EMERGING MARKETS

8

MARIA FREUND

16.28

0.04

0.83

BONDS - SHORT INVESTMENT GRADE DEBT BONDS - MULTI-SECTOR INCOME EQUITY - SMALL-CAP CORE MIXED ASSETS - FLEXIBLE PORTFOLIO

15.49

0.05

0.76

9

EVE TOURNIER

18.42

0.06

10 STEPHANIE BRANDALEONE

29.76

0.03

0.75

11

EILEEN RILEY

35.23

0.00

0.71

BLACKROCK HEALTH SCIENCES OPPORTUNITIES

EQUITY - HEALTH/BIOTECH- NOLOGY

38.89

0.05

0.69

12

ERIN XIE

MIXED ASSETS - MIXED-ASSET TARGET ALLOC GROWTH

1919 SOCIALLY RESPONSIVE BALANCED

13

AIMEE M. EUDY

37.41

0.07

0.65

FDP BLACKROCK COREALPHA BOND BLACKROCK COREALPHA BOND BUFFALO INTERNATIONAL

14

KAREN UYEHARA

BONDS - CORE BOND

8.46

0.17

0.64

EQUITY - INTERNATIONAL MULTI-CAP GROWTH

15

NICOLE KORNITZER

32.20

0.05

0.61

EQUITY - MID-CAP CORE EQUITY - SMALL-CAP CORE

CRM MID CAP VALUE

35.77

0.19

0.59

16

BRITTAIN EZZES

CRM SMALL/MID CAP VALUE

32.33

0.06

ALGER HEALTH SCIENCES

EQUITY - HEALTH/BIOTECHNOLOGY

17

TERESA MCROBERTS

58.53

0.11

0.58

CIBC ATLAS DISCIPLINED EQUITY PAYDEN CORPORATE BOND MATTHEWS ASIA INNOVATORS MATTHEWS ASIA SMALL COMPANIES

18

PATRICIA BANNAN

EQUITY - LARGE-CAP CORE

51.21

0.03

0.57

BONDS - CORPORATE DEBT FUNDS BBB-RATED

19

NATALIE N. TREVITHICK

16.46

0.15

0.56

EQUITY - PACIFIC EX JAPAN

20 LYDIA SO

19.82

0.20

0.55

CITYWIREUSA.COM DECEMBER 2019

N EWS ANA LYS I S

the positive conversation and trends, change will take time to implement. Another factor that may be a reason for women portfolio managers running less money is that they are more likely to break their track record than men as a result of taking time away from work to have a child. Investors, wary of management turnover, may vote with their money. It was a point made by Martin Gilbert, chairman of Aberdeen Standard Investments, in a July interview with Citywire. ‘It [greater female representation] is going to be glacial because clients want 0% change and that’s the issue,’ he said. Clarke, Bush and Snider agreed that investor desire for consistency could be a cause, but said it was unlikely to be a deciding factor. ‘It is true that we’d like to see stability in leadership teams on funds, but we also understand that if a firm is doing a good job of developing talent, you’re always kind of watching who they’re bringing along,’ Clarke said. ‘We’d like to see those transitions planned carefully.’ According to Snider, this issue can be avoided with good succession planning. ‘If your slate actually includes diverse candidates as people that you’re trying to at least consider or train for or get

At Mercer, cognitive diversity indicates varied ways of thinking, but identity diversity characterizes the different life experiences people have as a result of their race, gender or sexual orientation, and how that impacts decision-making. ‘We’ve always looked at cognitive diversity, which is how you get together groups of people who think differently, challenge each other, and hopefully will come up with a better outcome as a result of that,’ Clarke said. ‘Over the last two or three years, we’ve been talking much more specifically about areas such as gender, nationality, ethnicity and sexuality. The two are obviously connected because you could have people with different identities who probably have different backgrounds and experiences. They could end up with more cognitive diversity,’ she added. Sarah Bush, who was recently named head of North America manager research at Morningstar, said the firm has just begun looking at how to incorporate gender diversity into its process. ‘I think we are in the early stages of trying to figure out what the best way is to measure and to identify best practices there,’ she said. ‘I can tell you, having recently been sitting in the seat of the analysts, it is something that we look to understand, but it’s a question of how you measure it,’ she explained. ‘It may be a little bit easier with gender diversity, but as you start to get into different types of diversity, it can be also something where you ask, do you have comparable apples-to-apples statistics?’ WHAT’S HOLDING WOMEN BACK? According to Snider, the best way to implement change in the industry is to start at the beginning. ‘There’s a pipeline issue, which means asking if we have enough women and people who are from diverse backgrounds who look at finance or wealth management and asset management as a career they really feel passionate about and they want to go into in the future,’ she said. ‘That change has to start right at the recruitment end,’ Clarke said. All three gatekeepers agreed that despite

SAME NAMES ST I LL TOP OF THE

GAME FRANK TALBOT

HEAD OF INVESTMENT RESEARCH, CITYWIRE

This is the third time we have conducted this piece of research, having first run the numbers at the end of 2016 and then again in 2018. The methodology has remained unchanged, as has one third of the list, with seven managers making the grade this year also in the top 20 in 2018. These seven managers are Tiffany Hsiao, Katherine Renfrew, Anupam Damani, Amy Zhang, Eileen Riley, Nicole Kornitzer and Natalie Trevithick. The latter two managers also appeared in the first iteration of this research so have featured in all three top 20s. The fact there are seven of the same names in the 2019 and 2018 lists undoubtedly speaks to these investors’ skills and consistency, but it also reflects the fact that the strategies that worked three years ago – for example, long risk, growth equities and corporate bonds – are still working today. The period has rolled forward a year and the investment environment is broadly unchanged. In short, the same strategies, positioned the same way, are still delivering in 2019 as they were in the three years to 2018. As boring as that is, it speaks to the wider climate and the fact we are still in this rising-market environment. Lower for longer looks like it might be lower forever as central banks’ taps come back on, and stay on. As a result, the same asset classes are still being supported. It is not too surprising to see quite a few small-cap managers on this list given this is an area that remains a happy hunting ground for active managers, with outperformance rates much higher than in large-cap categories, another dynamic that has not changed in the last five years. Emerging market debt may be an exception to this trend of supported strategies, with the Nuveen pair of Renfrew and Damani making the list in 2018 and 2019, despite a more mixed overall environment for this category over the last five years. It is also impressive to see Matthews Asia’s Tiffany Hsiao sitting in second on this list and at the top of 2018’s, having delivered a very similar total return (41.37% versus 46.31%) this time around, despite the backdrop of the ongoing trade war. Yes, China small caps may be less affected than the BATs, but they won’t be immune to it. The trade war and its impact cannot be understated and it has certainly affected growth prospects, more so in China than in the US. This year’s number one, Pei Chen, is a new entrant to the list. To find out more about her, turn to Manager Profile on page 22.

ready for better roles, that’s your opportunity,’ she said. They also agreed that they can push asset managers to make these changes by incorporating diversity into their selection processes. ‘I don’t mean to brag about Mercer, but we are one of the biggest consultants in the world, and unless we ask these questions, nobody is going to ask about it,’ Clarke said. Bush added: ‘Anytime you start to ask those questions consistently, and people know that we’re watching it, and people understand that it’s an important point, I think that that does gradually influence behavior.’

Reproduced with permission by Media Licensing Co. (www.medialicensingco.com / + 44 (0) 20 3773 9320). Not to be reproduced without authorisation.

DECEMBER 2019 CITYWIREUSA.COM

This article reprint, originally published by Citywire Professional Buyer in December 2019, is considered sales literature for the Alger funds mentioned only and not for any other products shown. Please note that Citywire Professional Buyer is an independent publication and the performance and ratings cited in

the article do not represent the experience of any individual investor. Average Annual Total Returns (%) (as of 12/31/19)

1 Year 28.97

3 Years

5 Years

Since Inception

Alger Small Cap Growth Fund (Z) (incepted 12/31/10)

19.29

11.72

10.88

Russell 2000 Growth Index

28.48

12.49

9.34

11.23

Total Annual Fund Operating Expenses (Prospectus Dated 3/1/19) Without Waiver 1.12% With Waiver 0.99%

Average Annual Total Returns (%) (as of 12/31/19)

1 Year

3 Years

5 Years

10 Years

Since Inception

Alger Small Cap Growth Institutional Fund (I) (incepted 11/8/93)

29.78

18.57

11.54

12.23

9.76

Russell 2000 Growth Index

28.48

12.49

9.34

13.01

7.70

Total Annual Fund Operating Expenses (Prospectus Dated 3/1/19) 1.32%

Average Annual Total Returns (%) (as of 12/31/19)

1 Year

3 Years

5 Years

Since Inception

Alger Small Cap Focus Fund (Z) (incepted 12/29/10)

24.52

22.61

15.38

13.53

Russell 2000 Growth Index

28.48

12.49

9.34

11.23

Total Annual Fund Operating Expenses (Prospectus Dated 3/1/19) 0.87%

Average Annual Total Returns (%) (as of 12/31/19)

1 Year

3 Years

Since Inception

Alger Health Sciences Fund (Z) (incepted 5/28/15)

22.42

21.42

9.94

Russell 3000 Health Care Index

22.11

16.67

8.85

S&P 500 Index

31.49

15.27

11.86

Total Annual Fund Operating Expenses (Prospectus Dated 3/1/19) Without Waiver 0.84% With Waiver 0.75%

Fred Alger Management, LLC has contractually agreed to waive fees or to reimburse fund expenses (excluding acquired fund fees and expenses, dividend expense on short sales, borrowing costs, interest, taxes, brokerage and extraordinary expenses) through February 28, 2021 to the extent necessary to limit the annual operating expenses of Al- ger Health Sciences Fund Class Z to 0.75% and of Alger Small Cap Growth Fund Class Z to 0.99% of the class’s average daily net assets. This expense reimbursement may only be amended or terminated prior to its expiration date by agreement between Fred Alger Management, LLC and the Fund’s Board of Trustees, and will terminate automatically in the event of termination of the Investment Advisory Agreement. Fred Alger Management, LLC may, during the first year of the expense reimbursement contract, recoup any expenses waived or reimbursed pursuant to the expense reimbursement contract to the extent that such recoupment would not cause the expense ratio to exceed the lesser of the stated limitation in effect at the time of (i) the waiver or reimbursement and (ii) the recoupment after the repayment of the recoupment is taken into account. Class Z shares are available to certain investors with an initial investment minimum of $500,000. Class I shares are an investment vehicle for institutional investors, such as corporations, foundations, and trusts managing various types of employee benefit plans, as well as charitable, religious, and educational institutions. Please consult the prospectus for more information. Only periods greater than 12 months are annualized. Prior to August 7, 2015, the Alger Small Cap Focus Fund followed different investment strategies under the name “Alger Growth Opportunities Fund” and prior to February 12, 2015 was managed by a different portfo¬lio manager. Effective August 7, 2015, the Fund’s primary benchmark is the Russell 2000 Growth Index. The performance data quoted represents past performance, which is not an indication or a guarantee of future results. Invest- ment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Performance figures assume all distri¬butions are reinvested. For performance current to the most recent month end, visit www.alger.com or call 800.992.3863. The Board of Trustees of the Alger Small Cap Focus Fund has authorized a partial closing of the Fund effective July 31, 2019. Class Z Shares will be available for purchase by existing shareholders who maintain open accounts, new investors that utilize certain retirement recordkeeping platforms, and investors who transact with certain brokers identified by Fred Alger & Company, LLC. Please check with your financial advisor regarding the availability of Class Z Shares for purchase at their firm. Risk Disclosures: Investing in the stock market involves risks, and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. A significant portion of assets will be invested in technology and healthcare companies, which may be significantly affected by competition, innovation, regulation, and product obsolescence, and may be more volatile than the securities of other companies. Investing in companies of small capitalizations involve the risk that such issuers may have limited product lines or financial

resources, lack management depth, or have limited liquidity. Assets may be focused in a small number of holdings, making them susceptible to risks associated with a single economic, political or regulatory event than a more diversified portfolio. Private placements are offerings of a company’s securities not registered with the SEC and not offered to the public, for which limited information may be available. Such investments are generally considered to be illiquid. Active trading may increase transaction costs, brokerage commissions, and taxes, which can lower the return on investment. The Russell 2000® Growth Index is an unmanaged index designed to measure the performance of the 2,000 smallest companies in the Russell 3000® Index with higher price- to-book ratios and higher forecasted growth values. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on the total market capital- ization, which represents 99% of the U.S. equity market. The Russell 3000 Health Care Index is an unmanaged index that measures the performance of those companies in the Russell 3000 Index involved in the medical services or health care field. Also included are companies involved in research, development and production of pharmaceuticals and biotechnology. The S&P 500® is an index of large company stocks considered to be representative of the U.S. stock market. Investors cannot invest directly in any index. Index performance does not reflect deductions for fees, expenses or taxes. Note that comparing the performance to a different index might have materially different results than those shown. Any views and opinions expressed herein are not meant to provide investment advice and there is no guarantee that they will come to pass. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. The S&P indexes are a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Fred Alger Management, LLC and its affiliates. Copyright 2019 S&P Dow Jones Indices LLC, a subsidiary of McGraw Hill Financial Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visitwww.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein. Before investing, carefully consider the Fund’s investment objective, risks, charges, and expenses. For a prospectus and sum- mary prospectus containing this and other information, or for the Fund’s most recent month-end performance data, visit www. alger.com, call (800) 992-3863, or consult your financial advisor. Read the prospectus and summary prospectus carefully before investing. Distributor: Fred Alger & Company, LLC, Member NYSE Euronext, SIPC. NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.

Fred Alger & Company, LLC 360 Park Avenue South, New York, NY 10010 / 800.992.3863 / www.alger.com

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