Several surveys suggest that women have the edge when it comes to investing.
Despite my androgynous-sounding name, I am in fact, a girl. I recently attended a seminar run by Professor Karen Pine of Hertfordshire University, co-author of Sheconomics, and she claimed that women were better investors than men.
I was intrigued. The most canny investors I know are Fools, but I rarely come across female Fools. As Loyd Grossman would say, let's look at the evidence.
Statistics are right 80% of the time
One of the most widely quoted surveys in this debate is one commissioned by DigitalLook in 2004. The findings showed that, although they only represented 13 per cent of the 100,000 portfolios examined, the average woman's portfolio grew by more than 10 per cent in the year ending 31 July 2004, while the FTSE rose by only 7 per cent, and the average value of men's portfolios just 6 per cent.
The National Association of Investors Corp (NAIC), representing about 37,000 clubs in the US, has also added its two cents. In 1998, it found that all-female clubs had an average compounded lifetime return of 23.8 percent a year, compared with just 19.2 percent for all-male clubs.
French business school Ceram surveyed a cross section of investment funds. It found that a larger proportion of female fund managers reduced volatility in the fund. In 2008, most market prices fell, but fewer female fund managers correlated to a greater fall.
And if that weren't enough, a study carried out by the University of California at Davis revealed women's overall portfolios gained 1.4% more than men's over a six-year period from 1991 to 1997, with single women outperforming single men by 2.3%. Which just goes to show that men's bad investing influence rubs off with too close contact!
Bulls, Bears and Bunny Slippers
DigitalLook's research also suggests women outperform men when the market is both falling and rising.
The average woman's portfolio managed to grow 2 per cent in the year to 31 October 2001, despite the downturn in the economy and the reverberations of September 11. This compared to a 22 per cent fall in the value of UK shares as a whole, and a 26 per cent fall in the average value of men's portfolios surveyed.
Could this be suggesting that women appear to read the market better than men both on the way down and on the way up?
Why, why, why?
The success of women investors has been attributed to many different reasons. My own personal favourite is that women simply do everything better than men. And yes, I can read a map, assemble flat pack furniture, and wire a plug.
However, in investing terms some common themes recur when comparing the different approaches of men and women. Possible suggestions include:
- Women like to build a balanced portfolio of different types of stocks, rather than putting all their eggs in one basket.
- Women tend to invest in sensible retail companies, while men bet on the 'boy's toys' of technology and biotech stocks.
- Women have a tendency to pick 'unadventurous but steady' blue-chip type shares rather than riskier and more volatile stocks.
- Women like to thoroughly research shares before purchase, rather than going for gut feeling or instinct.
- Women tend to hold shares for longer periods, and make fewer transactions -- the dealing charges involved in men's more frequent trades alone would bring the average return down.
It has also been suggested that women like to invest in what they know, like major high street retailers and banks. Given the financial turmoil in the banking system and on the high street in recent years, it would be interesting to see if the consumer downturn has affected the female edge more than mere changes in market conditions.
So what do you think? Is it feminine intuition or a more balanced approach that gives us girls the edge? Or do you think men actually make bigger and more exciting gains; they are just tempered by equally large losses? Are you a man who invests in a female way or a fast-dealing woman who bets big and is guided by her stomach? Or is it all a load of old baloney…?
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