Women are good at most things, but when it comes to investing, we assume that men must be better at investing than women (due to prolonged gender stereotypes). Right? No. Wrong.
Research from FTSE-100 listed stockbroker Hargreaves Lansdown, has shown when it comes to investing their female clients seem to do better than men over a three-year period.
Why is this the case? Is it due to a women’s ability to multi-task generally in life, the lack of testerone or just a far superior investment brain?
Sarah Coles, personal finance analyst at Hargreaves Lansdown says: “When it comes to investment, the gap between women and men is well known, with women opening 20% fewer stocks and shares ISAs than men.
“What’s less well-known, however, are the personal achievements of women who invest. Over the three years from August 2014 to August 2017, women investing through Hargreaves Lansdown saw their investments increase 0.81% more than their male counterparts every year.
“If that performance continued for 30 years, women would end up with 25% more investments than men. It shows that while women may face barriers to investment, once they overcome them, they are often natural investors.”
In the 2011 book ‘Warren Buffett Invests Like a Girl: And Why You Should, Too’, by LouAnn Lofton, the author identifies characteristics in female investors which have made them just as successful at value investing, as US billionaire Warren Buffett – the ‘Sage of Omaha’ himself.
According to Lofton, female investors: trade less than men; are less overconfident; are more realistic; put in more effort researching investments; try to consider every angle and detail, as well as alternative points of view; are more immune to peer pressure and tend to make decisions the same way regardless of who’s watching; learn from their mistakes and are less willing to take extreme risks.
Marianna Fotaki, Professor of Business Ethics, at Warwick Business School says: “It is tempting to think that women are better at investing than men due to certain personality traits. However, other factors are at play – it is not that women differ from men because of their innate characteristics but because they are socialised to act differently; it is important for us to learn from their experience to promote better investment practices.”
Fotaki adds: “It is [good news] that this research shows women are better investors than men which makes difference over a longer period of time, but understanding why is key to addressing [the larger issues of] gender imbalance in society and promoting diversity in organisations; this is not only a right thing to do but also means good business.”
Last year, Investment Week began that journey of educating not only UK plc, but the investment industry, about the role women play in the financial services industry by launching the Women in Investment Awards 2018, in partnership with HSBC Global Asset Management.
From occupying senior positions in the boardroom, becoming a CEO of a FTSE 100 company to investing on a private basis for their family – women’s inspiring achievements cannot be ignored.
Investment Week received over 800 nominations for their inaugural awards event. The primary purpose of the event was and is to help shape the discussion around how diversity can be improved within the sector.
There is still a long way to go, especially when it comes to narrowing the gender pay gap, pushing for more flexible working arrangements, and increasing the number of women in senior positions.
Here is a link to the Women in Investment Awards 2018 website