Connecting Female Hedge Fund Managers to Capital

Castle-Newman: A great barometer for progress is the Women’s Investment Roundtable that I founded a decade ago. It’s a multi-day event that brings together top female portfolio managers from around the world for an ideas roundtable. What started as a 16-person event has grown into a community, which we call the WIR community, of more than 100 female investors. The conference now has about 45 investors in attendance and has become a marquis conference of the Equity Division.

These women are seasoned investors across asset managers and hedge funds. Over the past 10 years, I’ve seen a number of these women launch their own funds or become the lead PMs on the largest funds in their firms. The WIR community has provided a support system for women, because they can meet and learn from other women who have gone through these experiences.

To help keep women engaged on investing topics, I launched a thematic series in 2020, which provides connections to our best thought leaders in Research to debate current investment themes in the market. This has enabled access to our best content in a very scalable way. In some cases, the managers may not have received this direct access because they were unknown inside the walls of Morgan Stanley. Now, these investors have relationships with our best analysts and all of IED management.

Castle-Newman: Following the success of the Roundtable, we decided to add a “cap-intro” conference that focused exclusively on connecting female hedge fund managers to investors. The Morgan Stanley Women’s Investment Leadership Conference has grown into a seminal event for managers and investors in the five years since it launched. In December 2022, 26 female founders of funds and 150 allocators attended. We hosted 52 breakout sessions and four in-depth panel discussions. The quality of managers we had was unprecedented—a function of the fact that more women have started funds in the past three years. Our capital introduction team has seen growing interest from allocators interested in vetting female hedge fund managers, so demand on the investor side has picked up too. 

Our work has put Morgan Stanley at the forefront of capital introduction for women hedge fund managers. As a result, when women set up new funds, they will almost always contact us. For women, part of the issue when they go out to raise capital is that they’re not well-known. We open the door to the allocator community, so that founders start to build a network.

Castle-Newman: One challenge to starting a hedge fund is that women have to be successful enough within a firm to commit a sizable amount of their liquid net worth to launch. For some investors, it’s a chicken-and-egg situation. Large institutional investors, for example, will only invest a certain amount to ensure they don’t represent more than a certain percentage of a fund’s assets (except in circumstances in which they become a seed investor and share in the economics). As a result, new hedge funds will often have to grow a sizable amount before large institutions will consider investing. With this as a barrier to scale, it provides a great opportunity for Morgan Stanley to elevate the profile of female founders with investors.

Hedge fund industry veterans are also recognizing the need to provide scalable infrastructure to help female hedge fund managers get up and running right away. A few new platforms we’re hearing from want to provide help with infrastructure—the operational processes and technology—marketing and other business functions that are separate from the investing side. There’s a lot of opportunity for future progress in this realm, because it helps women launch on a timeline and raise capital more quickly, and we are in the middle of all of it.