Thursday, 08 February 2018 08:52

Women investors beat men by 25% over long term

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Analysts have found that women investors would have 25% bigger portfolios than men over 30 years, judging by a study of their performance over three years.

Research by Hargreaves Lansdown of its own clients, now totalling more than 1m, revealed that from August 2014 to August 2017, women outperformed men by an average of 0.81%.

If that performance was replicated over 30 years, women would end up with a 25% bigger portfolio, said the Bristol-based investment provider.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: "Women are far better investors than they think they are."

"They are often held back by a concern that they don't have sufficiently in-depth knowledge, or that they don't want to take on too much risk. As a result, industry figures show that women open 20% fewer stocks and shares ISAs than men."

Ms Coles said: "This analysis demonstrates that these concerns are misplaced. Women who invest overwhelmingly have the knowledge they need in order to make sound investment decisions.

"And rather than working against them, their determination not to take excessive risks with their investments is one of the things that makes them such good investors."

"Of course, this doesn't detract from the fact that men have also generated excellent returns during the period. In fact, roughly a third of both men and women saw returns of 30% or more over that three year period, which goes to show the success investors have had, regardless of gender."

The report found four reasons why women are investment naturals. These were:

1. Women are more likely to have naturally diverse portfolios

Some 44% of women have either most or all of their portfolio in funds - compared with 38% of men. This naturally diversifies their portfolios more quickly, because fund managers will take a stake in number of companies, so even a small investment is quickly split in several different ways. This has the benefit of spreading the risk. As a result, diversified portfolios tend to be less volatile.

2. Women tend to hold less risky investments

The analysis found women were less likely to invest in riskier assets - such as single company shares of smaller firms or those listed on the Alternative Investment Market. As a result, women were 50% less likely to suffer a loss of 30% or more in this period.

3. Women are more likely to 'buy and hold'

Women trade shares 49% less frequently than men, and funds 67% less frequently, so they are not incurring trading costs.

4. Women are more likely to invest through an ISA

Despite fewer women opening a stocks and shares ISA, of those who do invest, some 65% of women invest through an ISA, compared to only 58% of men. Women are also 50% more likely to be the named party on a Junior ISA - invested on behalf of a child.

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Last modified on Thursday, 08 February 2018 09:00
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