Want to beef up your returns? It pays to invest like a woman!
TODAY is International Women’s Day, a day where t he achievements of women around the world are celebrated. It is also an occasion to look into why women don’t invest as much as men. Almost a third more men hold investmentbased Isas than women, while women in their 60s have pension pots that are on average £100,000 less than those of men.
Given that women live longer and that cash savings typically underperform investments, experts say that women’s lack of exposure to the stock market runs the risk of leaving many high and dry.
Amanda Sillars, a fund manager with Jupiter, says: ‘I would say to women: you’ve got to support yourself financially, even if you are married. You’ve got to prioritise yourself and think l ong term. You’ve got to take a little investment risk otherwise you’ll only have a little financial reward.’
The conundrum is that although women invest less than men, studies show that they are typically better at it. According to analysis by Warwick Business School, women outperform men at investing by 1.8 percentage points over three years. This is based on data from men and women using the Barclays Smart Investor service.
The researchers put this down to several factors, including women trading less often and focusing on shares that already have a good track record, rather than betting big on a speculative investment. Other surveys, notably from investment house Fidelity and the University of California, have confirmed the school’s findings.
Two conclusions can be drawn: women should invest more, and more people in general should invest like women. The Mail on Sunday spoke to a number of leading female finance experts to find out how.
WHY MANY WOMEN JUST DON’T INVEST
MANY experts believe that one reason why fewer women invest is historic. Until recent decades, men held the purse strings. ‘Women have left it to men - and we have to break that cycle,’ says financial adviser Katie Campbell, from Think Financial Wealth Management.
Some say the industry itself has a lot to answer for. ‘ For decades, investment companies have solely marketed themselves to men. The investment professionals have been men, the marketing for customers is targeted at men by men,’ says Natasha Tiwari, psychologist and founder of financial adviser Veda Group.
‘This has created an unconscious bias, both by women, but also against women, by the institutions which sell investment products, that the investing world is not one made for them.’ Alexandra Jackson, investment manager of investment fund Rathbone UK Opportunities, agrees. She says: ‘The investment industry has slightly overlooked women. We often think in terms of outcomes – we are interested in growing that pot of money for a reason, for example so our children can go to university – there’s no specific product to help us do that. Pensions are set up for someone who can put in a certain amount every single month, and that doesn’t always work for women either. There’s a lot of jargon, and people like to make it sound really complicated. It’s not.’
Women are more likely to take time out of their career to have children, which can also impact on investment plans. ‘Having taken some time off work myself to look after young children, it brings home the fact that a career break can impact your finances,’ says Juliet Schooling Latter, research director at investment fund scrutineer Chelsea Financial Services. She says more needs to be done to encourage women to invest, adding: ‘Women are becoming more switched on about investments, but unless you know you should be doing something, you don’t do it. Investing needs to be more mainstream.’
WHY FEMALES HAVE AN ADVANTAGE
DESPITE the lack of female investors, fund managers say they can see why those women who do invest are successful. Abi Glenny, who runs investment fund Aberdeen Standard Life UK Mid Cap Equity, says women and men often come to the same investment conclusions but take a different path. She adds: ‘Studies indicate that women are less risky and take a more structured approach.’
Veda’s Natasha Tiwari adds: ‘Building long-term wealth is fundamentally about being disciplined – having a solid plan and sticking with it and not being swayed by noise and emotion. That includes panic when things don’t go to plan and hubris when things are going well. Evidence s uggests t hat women are better at maintaining a level head in these circumstances.’
Rathbone’s Jackson says she exhibits ‘typically female’ traits in her own desire to spend time in the market rather than timing it – buying companies on fundamentals, not price volatility.
She says: ‘I would rather find the best company that I can and not worry as much about what I have to pay for it, rather than time the bottom. High- quality growth is my style. Women earn less and live longer so have a different capacity to take risk. Patience is important.’
Despite recent market falls, Rathbone UK Opportunities is up 11 per cent over the past year, compared to a zero return from the FTSE AllShare Index.
FUNDS THAT ARE RUN BY WOMEN
RATHBONE UK Opportunities is one successful fund run by a woman. Others to consider are: 1 EdenTree Amity UK: An ethical fund successfully run by Sue Round, with much of its assets in UK equities. It has outperformed its peer group over the past five years. Round is a veteran manager, having been in the business for more than 30 years. Major holdings include hazard protection group Halma. 2. M&G Emerging Markets Bond: Run by Claudia Calich, it is up nearly 14 per cent over the past year. Calich is excited by a number of emerging bond markets, including Rwanda. 3. Investec Global Environment: Managers Deirdre Cooper and Graeme Baker invest in long-term decarbonisation projects. A quarter of the portfolio is in companies involved in clean power and 14 per cent is exposed to energy efficiency projects. Cooper says: ‘I’ve been doing environmental investing for 15 years. I’ve seen a tipping point in the past two years with regulatory and technology changes, but also consumer behaviour.’