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Women Demonstrated to Consistently Outperform Men Investing in the Stock Market

Investing for beginners

The stereotypical image of a successful stock market trader, investor or broker is undeniably male. The fund management profession, institutional trading floors and profile of well-known market analysts or star investors such as Warren Buffet is also heavily weighted towards men. In many ways, despite recent improvement and a cautiously positive trend towards greater gender balance, the investment and trading industries are among the most backward when it comes to female representation, especially at more senior levels. According to Morningstar research, just 13% of fund managers are women and that statistic has barely changed over the past 10 years.

When it comes to private investors investing online in ISAs and SIPPs, the demographic is also heavily male. The reasons why men tend to take responsibility for a household’s investments, even if women are more commonly in control of day-to-day budgeting and planning of finances, are probably too deep a topic to get into here. It can probably be roughly boiled down to the historical legacy of traditional gender roles. Whatever the reason, this is one area that modernisation in the household division of labour, has been slower to take hold. British men hold over 1m stocks and shares ISAs with only 872,000 held by women. The imbalance is reversed when it comes to cash ISAs, with over 5 million held by women compared to almost 1 million less by men.

However, researched commission by The Times newspaper’s Money section suggests that we should all be handing over the logins to the household account with an online stock broker to the woman of the house. Statistically, it looks like in the majority of cases the probability is she’ll do a better job!

Statistical analysis of accounts held on Hargreaves Lansdown, the UK’s biggest online stock broker, show that between 2015 and 2017, female customers outperformed their male counterparts by an average of 0.48% a year. If that is extrapolated out over 30 years and includes compounding returns, a £10,000 investment pot managed by the average female Hargreaves Lansdown client would be worth £97,390 compared to £85,220 for the average male client.

HL’s female clients tend to have more diversified portfolios than their male counterparts with 44% having the majority in funds, compared to 38% of men, who are more inclined to chase bigger profits by investing in individual stocks they believe in. When they do invest in individual stocks, female account holders are less attracted by smaller, growth stocks and show a greater inclination towards larger, less volatile companies. They also trade individual holdings less frequently and focus more on the longer term.

The combination of greater diversity, less risk and longer term outlook on average favoured by women investors holds the key to their better results. So for everyone planning on a great retirement filled with travel, hobbies and little luxuries – it might be time to hand over the household’s investments to the lady of the house if you haven’t already done so!

Risk Warning:

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Paul

The author Paul