Women and money make a perfect match
June 18th, 2007 by moniesThe same will be true at every moneyrelated party this summer and I see it in every other kind of City event I attend or organise. I’ve been running an investment round-table discussion every month for three years and in all that time I’ve had only one female participant, Marina Bond, manager of the Rathbone Smaller Companies fund.
That’s not for want of trying to make things a bit more diverse: if I stop to think of all the female fund managers I know, I can only come up with five or six. Over 90 per cent of Britain’s fund managers are men.
It isn’t just in the professional world that women seem to fight shy of money management. Building up income-producing assets is particularly important for women — we’re the ones who most often give up work and salary income to look after children — yet we just don’t do it. According to a recent survey by Investec, the average woman has over a quarter of her wealth held in cash. Worse, 7 per cent of us have all of our money held in cash and overall more than 2 million women have over £25,000 sitting in a bank account where, day after day, when inflation and tax are taken into account, it loses rather than gains in value.
Why are there so few women managing the nation’s money, or even their own? The first thing to note is that it is not because we aren’t good at it. On the contrary, says Nicola Horlick, one of Britain’s few high-profile female managers and the founder of Bramdean Asset Management, we may well be much better at it than men. To understand why, Horlick tells me, think television. Give a man the zapper and he’ll flick from channel to channel watching a bit of several programmes and driving everyone else mad by never settling on any one of them. Women are more ‘research-oriented’: they read the listings carefully, pick a programme and stick with it. They tend to take the same approach to investing.
While men tend to jump on bandwagons and buy every hot thing they hear about, we have an innate caution — a sort of ‘capital-protection urge’ — that helps us to block out a lot of the market’s useless noises.
Elissa Bayer, a private-client fund manager at Insinger de Beaufort, agrees. Women do more research before they invest, ask more questions, and don’t buy things they don’t understand — they’re more likely to go for shares in leisure and retail companies than, say, biotech. They also have a greater tendency to diversify properly. Men, on the other hand, invest in a less thoughtful way — often, it seems, just for the thrill of it. An ABN Amro survey last year had 18 per cent of men admitting that their primary motivation for investing was ‘excitement and anticipation’. Only 5 per cent of women surveyed felt the same. This leads on to one of the most crucial differences between men and women: having done their research more carefully and being more interested in long-term capital protection than upfront kicks, they tend to trade less, something that is crucial to successful investing.
Changing your mind is expensive when you’re managing money — each trade costs, and in doing so it makes nasty inroads into any returns you have made.
It’s tempting, I know, to dismiss all this as bunkum, but there is compelling statistical evidence to back it up. A survey by the financial information service Digital Look showed that portfolios run by their female clients regularly outperformed those run by their male clients, by a significant margin. Several much bigger studies in the US — including one by the University of California which showed that from 1991 to 1997 average female portfolios outperformed average male portfolios by 1.4 per cent a year — come to much the same conclusion. Sheila Gleason of Barclays Wealth Solutions says that this is true of almost every period she has looked at, although men did better during the tech bubble when, briefly, ‘hot’ stocks were the best place to be.
Author: Webb, Merryn Somerset
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