After working as a trader for years and then starting and running her own hedge fund firm, Renée Haugerud kept running into two problems when trying to hire people: There was a lack of female traders, and new hires fresh from college didn’t have the skills she needed.
To remedy both of these issues, Haugerud, founder and chief investment officer of New York–based Galtere, along with her husband, John Murphy, started the Galtere Institute: Finance for the Future Initiative at the University of Tennessee at Chattanooga in 2009. (Murphy is an alumnus.) The couple seeded the institute with $1.5 million; it offers access to a Bloomberg trading lab and classes, and hosts an annual Behavioral Finance Symposium.
Haugerud had specific ideas for the Galtere Institute. One was eschewing stock selection for a global macro focus. She also was interested not just in increasing the number of female traders (men are welcome in the program) but also in the neuroscience and psychology of trading. She says she wanted a “provocative” program that would produce high-quality employees.
“What’s provocative about it is basically saying there is a difference between the genders,” she says. “I wanted a global macro education program from which I could get graduates to hire or intern who understood all asset classes and all geographies, the basic housekeeping of all asset classes and the psychology and neuroscience of trading, as well as the math and the quantitative of trading.”
Haugerud believes in a diverse workforce simply because it produces better returns. “A diverse team makes more money, has more ideas and represents the world,” she says. “I always say, ‘Don’t look at your portfolio to see if it’s diversified — look at your managers.’”
Does gender make a difference in trading? John Coates, a senior research fellow in neuroscience and finance at the University of Cambridge and a Behavioral Symposium speaker, researched City of London traders’ behavior patterns, and the results indicate a correlation between risk-taking and the endocrinic and autonomic nervous systems. To Haugerud this research isn’t simply interesting; it’s also useful.
“This is to teach awareness but also to use it to your advantage by putting mousetraps on your weaknesses and opening up your advantages,” she says.
Haugerud says women make fewer trades than men, leading to fewer mistakes. Women buy at the top and sell at the bottom much less than men do; they hold positions longer but exit wrong positions sooner; and they don’t chase hot investments or those they don’t completely understand. This isn’t because of risk aversion, Haugerud says: “The reason women outperform is better risk management, and better risk management comes from this psychology of trading.”
Each year four or five Galtere Institute students are selected to take part in a summer internship at Haugerud’s firm. One of the 2013 scholars was Maria Pecora Omana, who graduated in December and is now interning for an investment bank in Chattanooga. She describes her internship experience — which included talks by experts from JPMorgan Chase & Co., Barclays and Jefferies, and being responsible for her own simulated $100 million portfolio — as “mind-blowing.”
“She is very driven,” Pecora Omana says of Haugerud. “She inspired a lot of female students. That’s why some of my friends changed majors, because they saw, ‘Hey, I can actually do this.’”
The Galtere Institute, Haugerud says, is a work in progress that she sees evolving into a certificate program within the business school, and with an online component. She expects the graduates to be a hot commodity. “I believe every single one of our students will be hired by a bank or a hedge fund in whatever area they want,” she says, “because the experience they’ve gained will be better than any other college graduate anywhere.”