International Women’s Day 2019: Trading Industry Celebrates Women

international-womens-day-2019#BalanceforBetter is the theme for this year’s International Women’s Day, observed on March 8. As the world celebrates women’s achievements and raises awareness of discrimination in its fight for gender equality, the capital markets industry reflects on the historical gaps between genders in investing and financial matters.

A report by Australia-based research house Investment Trends found that more women are investing and taking control of their financial future than ever before, with the number of Australian female online investors doubling from 76,000 to 150,000 between 2013 and 2018. Still, women account only for one-fifth of the country’s online investors.

Suzie Toohey, Global Head of Client Service and Sales at Investment Trends, commented:

“The twofold increase in the female online investor population over the last five years shows that more women are building their wealth and moving towards an independently secured financial future. While females are joining the active online investor population in Australia at increasing rates, there’s a very long way to go before we reach parity as women still represent only 20% of Australia’s online investors.”

Women More Likely to Prioritize ESG Factors

Regarding the financial products that most resonate with women, the firm spotted that investment in ETFs increased from 7 percent to 25 percent in the last five years. The ESG (Environmental, Social, Governance) criteria, which measure the sustainability and ethical impact of an investment in a company, is taken very much into account by female investors, with 29 percent considering it “very important”, compared to 19 percent for their male counterparts.

Suzie Toohey, Global Head of Client Service and Sales at Investment Trends
Suzie Toohey

“The ability of ETFs to provide convenient, low-cost access to a diversified investment portfolio resonates strongly with female investors across Australia, giving them an efficient way to build a core portfolio without needing to pick individual stocks”, Suzie Toohey said. “The growing number of ESG investment products in Australia will certainly give investors, women and men alike, more choices that align with their investment philosophy.”

A recent survey by Morgan Stanley confirmed women’s ESG priorities as 84 percent were interested in “sustainable” investing, while only 67 percent of the men cared for those factors when making investment decisions. Trillium Asset Management, an investment firm that integrates the ESG factors into the investment process as a way to identify the companies best positioned to deliver strong long-term performance, estimates that two-thirds of the firm’s individual clients are women.

Financial security, however, remains an obstacle for narrowing the gap between genders as Australians build their wealth and plan for a retirement with a reasonable lifestyle.

“While more women are investing and taking control of their financial future than ever before, the gap between the independent financial security of men and women remains too large, and the wealth management industry must continually increase its focus on delivering products and services that work for women, and work for them at every stage of their life – young, middle-aged or mature; single, partnered or widowed”, Investment Trends’ Toohey concluded.

Women Are Better Investors But Have Less Liquidity

An estimate by Boston Consulting Group found that private wealth held by women grew from $34trn to $51trn from 2010 to 2015. That represents 30 percent of all private wealth in the world, according to BCG. The firm expects women to converge further in years to come, holding $72trn (32 percent of the total) by 2020.

2017 survey by Fidelity Investments, however, found that women are better investors than men as “client data analysis shows on average, women performed better than men when it comes to investing by 40 basis points, or 0.4 percent. Over time, 40bp can have a significant impact on an investment portfolio.
The study also found that women came out on top when comparing annual savings rates at every salary level. Women saved an annual average of 9.0 percent of their paychecks, compared to an average of 8.6 percent saved by their male counterparts.
Yet, the aforementioned Investment Trends report concluded that women account only for 20 percent of Australia’s online investors. That may be at least partly due to the gender pay gap as most women earn less than men, $0.83 on the dollar in the case of the United States, which reduces the likelihood of producing greater savings in absolute terms although 90 percent of women will eventually take charge of their family’s wealth and 45 percent of U.S. millionaires are women.
Women Invest Smarter But Face Negative Stereotypes 
Fidelity Investments’ client data revealed that female investors tend to hold a more long term, conservative view with their investments, tending to buy and hold stocks. They take on less risk than their male counterparts and are patient with their portfolio, unlike men who make 55 percent more trades than women.
A recent report by Merrill Lynch found that 41 percent of women say their biggest financial regret is not investing more. When it comes to managing investments, only about half (52%) of women say they are confident, compared to 68% of men.
As investors, women buck stereotypes, according to a survey conducted by Capital Group. While facing negative stereotypes about their financial acumen, women’s actual investment behavior tends to follow recommended investment principles more often than men’s, according to Wells Fargo. The report concluded that women tend to be more fearful of a market downturn, are more likely to expect lower average returns on their investments, and are more likely to say they are afraid to take investment risks.
Men tend to be overconfident about their investment ability, according to Wells Fargo, which by comparison makes women more realistic. Instead of conservative, the female gender may simply be investing smarter. An example of that is how women look more for funds with a track record of outperforming the stock market during downturns, which tend to deliver higher gains in the long term.
Times are changing and we are all changing with them. #BalanceforBetter is the theme for the International Women’s Day of the year 2019. Equal opportunity should have been a basic human value since the beginning of time, but now it finally seems we are starting to head that way. We’ll get there, in time.