This article was published on The Sunday Times, 23rd November 2015. The survey was taken from a sample size of 2880 retail investors and 864 investment professionals from 16 and 19 countries and regions respectively. Several points in the article were note-worthy:
a. Women are more risk-adverse than men (Women held 45% of their investment in cash compare to only 37% of men.)
b. 70% of women will adopt a more conservative strategy compare to 58% of men, should their investment losses hit greater than 20%.
c. Women tend to trade less frequently than men. (65% of women trade at least once per quarterly compare to 75% of men)
d. Women more likely to admit that they have no knowledge of an investment compare to men.
e. Women tend to make checks and discuss about an investment before they invest. (32% of women checked with their spouse compare to about 18% of men)
f. When encounter financial success, 57% of women took full credit compare to 75% of men.
g. Women take more time and evidence to be convinced of investments (46% believe that the performance of investment managers was the result of skills as opposed to luck compare to 57% of men.)
h. Women tend to see professional investors ‘skill’ as a more ‘broad-based achievement’ like interpreting information, understanding market movements or tackling risks. On the other hand, men believe that the ‘skill’ more relates more to higher performance, such as higher risk-adjusted returns.
i. Hedge funds run by women consistently outperform those that were run by men for the period between 2007 and mid-2013.
j Female analysts making sell recommendations performed better in terms of information ratio. The recommendation ratio is the portfolio returns above the benchmark against the volatility of those returns.
Over all, we can conclude that women tend to be more detailed, carry out due diligence and take a more conservative stance when comes to investing. In fact, this is also true from my observation. As a stocks trainer, I noticed that more than half of my students so far were women. In my opinion, men tend to be more optimistic of their investing capabilities and, thus, tend to ‘short-cut’ their way into aggressive investments, not only in stocks, but also options and forex.
In fact, I had heard about this discussion over the radio several months ago. One of the interviewee even mentioned that stocks trading were specifically designed to target women investors. However, of course, it does not mean that men are not suitable for stocks. It just so happen that the general characteristics of women made them suitable for stocks compare to men.
For stock investors out there. perhaps, take a more ‘womenly approach’ when comes to investing may see us a long way through our investing journey.
Brennen has been investing in the stock market for 26 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.