Men and women each have their areas of expertise and interest – sometimes these conform to stereotypes (ie. the gender bias of World Cup viewers); sometimes they do not. One stereotype that needs blasting out of the park is that men are better at investing.
Research published by Barclays today found that it is women who should be wearing the pinstripes – those investing on its platform outperformed men by 1.8 per cent over a three-year period.
While annual returns on investments for men were on average a marginal 0.14 per cent above the performance of the FTSE 100, annual returns on the investment portfolios held by women were 1.94 per cent above it. This means returns made by women investing with Barclays outperformed men by 1.8 per cent.
“The stock market is often portrayed as a high energy, risky environment, but this analysis shows that taking a more long-term view about what to invest in, rather than picking eye-catching and potentially more volatile shares, is actually likely to provide a better return on your money.
Clare Francis, director, Barclays
The success secrets of female investors
The analysis, which was carried out by Professor Neil Stewart at Warwick Business School, University of Warwick, also found that women traded less frequently – an average of nine times a year, compared to 13 times for men.
But the biggest impact on their returns came in their appetite for the type of stocks they invested in.
Researchers found that female investors were less likely to indulge in the “lottery style” of investment that appealed to men.
The Warwick Business School analysis defines “lottery style” investing as a tendency to invest in more speculative, lower priced shares that might increase in value substantially, along with a desire to keep to shares that show a loss while selling off their winners – the ones that have actually increased in value.
– Considered, not cautious
– Good track record, not speculative
– Invest to support life goals, rather than for thrills
Clare Francis, Director for Savings and Investments at Barclays Smart Investor, says the difference in performance reveals a more considered approach from women, rather than caution.
She explains: “The stock market is often portrayed as a high energy, risky environment, but this analysis shows that taking a more long-term view about what to invest in, rather than picking eye-catching and potentially more volatile shares, is actually likely to provide a better return on your money.
“The research shows that you really don’t have to be a stock market genius to invest. Opting for funds, rather than individual shares, can help reduce the overall risk and over time, hopefully result in good returns that will be better than you’d have achieved if you’d kept all of your money in cash, albeit that cash provides certainty. It cannot fall in nominal value.”
There’s increasing evidence that women are more interested than men in investing with purpose. A report recently published by Moxie Future found that 83 per cent of women care about where their money is invested, 69 per cent feel a sense of urgency to invest responsibly, and 63 per cent are motivated to be responsible investors. Barclays launched a Multi-Impact Growth Fund, only available on its platform last year.
Neil Stewart, Professor of Behavioural Science at Warwick Business School – part of the University of Warwick – who led the analysis, says: “The tendencies displayed by people, such as investing in more speculative stocks and not wanting to let go of shares showing a loss, are no real surprise. If you have ever watched a bad movie to the end, you are having trouble letting go of a loss. If you have ever bought a lottery ticket, you have been attracted to big wins, but wins that are very unlikely.
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“Men are just a little more likely to be drawn to more speculative stocks whereas women are more likely to focus on shares that already have a good track record. Women also take a more long-term perspective, trading less frequently. This possibly means women are investing more to support their financial goals, whereas men are attracted to what they see as the thrill of investing.”