Women’s Month is upon us, prompting the question as to whether women make better investors than men. The notion that the fairer sex is inherently better suited to investing has gained considerable traction in recent years.
The Economist in 2014: ‘Why women investors appear to outperform men.’
Fortune in 2015: ’Two new pieces of research note that when it comes to both saving and investing, women are once again kicking butts and taking names.’
CNBC in 2015: ‘Is your Valentine a better stock picker than you?’ ‘Men may be more active –and more confident –investors than women. But, as it turns out, women may actually be the better investors.’
Based on research from SigFig on 2,5 million portfolios, it found women outperformed men last year by 60 bps. Further, men traded their portfolios 1,5 times more, leading to higher losses; men sometimes made much more but also lost much more; and while women were less likely to beat the market men were less likely to meet expectations.
Regarding savings, Fortune found that women save more. Fidelity Investments showed that women saved 8,3% of their salaries compared to men’s 7,9%. Both these figures, compounded over a lifetime, generate a fundamental difference.
Terrance Odean and Brad Barber showed that women outperform men annually by about one per cent. A study by Betterment, a computerised portfolio manager, looked at the accounts of around 60 000 investors, about one-quarter of whom were women. Women signed into their accounts 45% less frequently and changed their asset allocation 20% less frequently than their male counterparts.
The Economist reported that in 2013 hedge funds run by women returned 9,8% compared to a lesser 6,13% for the index and that this trend was also found in earlier years.
‘If risk appetite was a factor, you’d expect men to beat women in years when risky assets do well … The fact that female-run hedge funds have apparently outperformed in both up- and down-years suggests something else is afoot,’ The Economist reported.
Author: Mike Lledo CA(SA) is the CEO at Consolidated Financial Planning