Interview with Kelly Easterling, KPMG

Kelly EasKelly Easterlingterling is an audit partner with KPMG serving the New York asset management practice. Kelly specializes in serving clients in the alternative investments industry including hedge funds and private equity funds. She advises clients on initial organizational structure and documentation, supervises audits and consults with management regarding various operations and audit matters.
Kelly began her career at Ernst & Young, where she served a broad range of client engagements. In 2002, Kelly joined Rothstein Kass to launch the Texas practice, and was promoted to principal in 2004. In 2008, Kelly transitioned from Office Managing Partner of the Firm’s Dallas-based office to Office Managing Partner of the Walnut Creek practice in the San Francisco Bay Area. She joined KPMG as part of their acquisition of Rothstein Kass in July 2014 and relocated to New York in the fall of 2014.
Kelly holds a Bachelor of Science degree in accounting and is a member of the American Institute of Certified Public Accountants (AICPA) and the California and New YorkSociety of Certified Public Accountants. You co-authored the fourth annual “Women in Alternative Investments Report” which was published earlier this year. What were the key findings?
Kelly Easterling: The key findings surrounded three major areas. The component which has been most discussed is the HFR Women Index and its continued out-performance against the overall hedge fund industry. We were excited at KPMG to work with HFR on this important initiative. To see how these women continue to put up excellent returns is a testament to their commitment to our business. Secondly, we were interested to see where women participate in the various facets of our industry. While the number of general partners and portfolio managers has slowly increased in responses over the four years of the survey, the majority of women continue to be involved in operations and business development roles at their respective funds. Although these roles are very important, in order to truly change the industry, we need to see more women in portfolio decision making roles. Finally, although it was less pronounced in the original survey results, I have personally found it very interesting the difference between the perception of the general partners and investment limited partners as to why there are not as many women in decision making roles in our industry. The general partners perceive the issue to be one of demand and the limited partners believe it to be one of supply where there are not enough managers to choose from. It was eye opening to see the very polarized position between the two groups. Why do women run funds find capital-raising more challenging than their male peers?
Easterling: The challenges for women in fund raising continues to be a topic of conversation in our survey. According to the respondents, 79 percent of women continue to believe that it is harder for them to raise assets as compared to their male counterparts. They indicated various reasons for this position including the stereotypes of family and personal responsibilities as well as less access to investor networks and the perception of women being more risk adverse. We realize that this fund raising difficulty is in direct opposition to the out-performance in their investment making decisions, which makes it all the more difficult to comprehend. Shouldn’t the fact of out-performance of women run funds vs. men run funds help opening the doors when capital-raising?
Easterling: To the respondents in the survey, this is exactly what should happen. Their performance returns should open doors to potential investors and as they compare to the industry as a whole, should allow them to attract that capital. While the conversations are being had, women managers have historically been smaller managers in assets under management (AUM) and thus have sometimes not attracted the attention of the larger institutional investors. As one of the contributors in our report indicated, until the investors believe that a more diverse team delivers better investment results and as such invests accordingly, it will be difficult to move the needle in capital raising. What reasons could you find why women run funds outperform men run funds and is there a lesson to learn for male run funds?

Easterling: When you study the HFR index, you will notice that not only is there out performance but there is also a lesser degree of volatility in the return profile. We believe that part of the reason that women out-perform the industry as a whole resides in the fact that they are more risk controlled in their investment style and willing to exit investments which are not performing as compared to managers as a whole. Thank you for the interview.