A Conversation with Diana Richey
Studies often suggest women portfolio managers take a more disciplined approach to risk. In your experience, is that difference real or does it come from the incentives and scrutiny women face in a still male-dominated industry?
I do think that difference is real. A number of institutional studies have found that female portfolio managers tend to size positions more conservatively, diversify slightly more, and hold a bit more liquidity.
My personal interpretation is that the so-called confidence gap is at play here. The standard narrative is that women are at a professional disadvantage because they are less confident in job interviews, performance reviews, etc. But when it comes to investing, I think some doubts can be helpful. Markets are inherently uncertain and quite volatile, and a healthy respect for that uncertainty can encourage a stronger focus on downside protection.
The numbers suggest women-led funds often outperform, so why does the capital allocation gap persist? Is it a pipeline issue, a network issue, or something structural in how institutional allocators make decisions?
I think part of what we may be seeing here is selection effect. Women still represent a relatively small percentage of portfolio managers, and when the bar to entry is high, the individuals who make it through that filter are often exceptionally capable. That can naturally lead to strong performance statistics.
Looking ahead, I’m hopeful that more flexible ways of working will gradually change the landscape. As investing becomes less tied to traditional institutional structures, and as more people are able to leverage technology to do high-quality analytical work, the field may become accessible to a broader range of talented investors—men and women alike.
What’s the best investment call you made when consensus was clearly pointing the other way—and what signal convinced you the crowd was wrong?
This one’s a bit tough. I don’t really think about investing in terms of making big calls. My approach is more about working with probabilities and making small adjustments over time.
By and large, I build a diversified portfolio of high-quality companies, along with gold, some industrial metals, and a bit of tactical fixed income. From there, I adjust position sizes gradually to reflect the macroeconomic environment and to lock in gains when investments have performed well.
The closest I come to making a true “call” is when I see the rate of growth in both inflation and GDP beginning to slow. When those two forces decelerate at the same time, it can signal the early stages of a broader market decline or even a crash. That’s the one environment where I’ll become noticeably more defensive. You’ll typically see me allocate more to cash and gold until conditions stabilize.
Markets constantly challenge investors’ views. What signals or indicators tell you that a thesis is wrong and it’s time to change your position?
Markets are incredibly challenging, and news and narratives tend to be fairly unreliable. Because of that, I built a fractal model that updates overnight. At the start of each trading day, the model gives me a probable price range for each ticker that I own or may want to own. It also shows how that probable range is moving up or down over time. I’ve found that I make better decisions when I focus on the math, rather than the headlines.
