New research has provided further insight into growing Industry views that suggest women make better investors than men. An independent survey commissioned by online, execution-only stockbrokers Hoodless Brennan found that women tend to build more balanced portfolios that yield long-term returns.
Significantly, the women surveyed were beginners to the stock market, 98% of whom did not consider themselves particularly knowledgeable investors.
The survey of Hoodless Brennan’s female customers found that their success was down to taking a balanced, low risk approach as opposed to higher risk strategies more commonly favoured by male investors.
The research suggests these women’s investment choices were not made using in-depth financial knowledge, but through simple common-sense approaches, based on their every day experiences, such as in the retail sector. Women investors tend to follow and invest in brands that become fashionable or successful.
They seem to pinpoint capital growth opportunities early, by witnessing the customers at the tills before the companies report increased sales and by favouring to invest in more traditional industries rather than more speculative companies or sectors.
The majority of female investors questioned stated that they are not financial experts. 63% of Hoodless Brennan’s female customers describe themselves as either a “novice” to the stockmarket or a “dabbler” in investing, while only 2% reported they are Day Traders making a living from investing. Interestingly 16% of the male customers questioned considered themselves to be risk-takers, compared to only 7% of women.
These findings would seem to lend support to research from leading financial web site and information provider DigitalLook.com, that over the last year, the average performance of women's investments has significantly beaten those chosen by men and the London stock market itself.1
The ease of use and anonymity offered by on-line stock brokers, offers an attractive proposition for the growing number of female investors whilst the growing numbers of female investors is perhaps also a reflection of the change in society with more women becoming financially independent.
More and more female investors are taking advantage of the savings in lower commission and charges offered by online brokers over traditional brokers and the anonymity offered by dealing electronically. In the last three months, use of sharetrading websites has increased by 20%.2
Hoodless Brennan offers the UK’s cheapest share dealing at a flat rate commission of £7 per trade.3 The low cost of dealing online has made shares more attractive to private investors who previously saw them as an inaccessible investment choice suitable for those with larger sums to invest because of the high traditional costs brokers charged.
Online Broking Manager Mark Rayden believes women without a financial background often make the soundest investment decisions:
“Are women better investors? As the expression goes ‘Men are from Mars and Women from Venus’… in the case of investing in shares it looks like Venus just might be a more sensible place to follow and put your money!”
Andy Yates, Director at DigitalLook.com, said:
“Women really are the better sex when it comes to share investing. While men tend to take more risks with their hard earned savings, women take a more balanced and considered view and time again it pays dividends.”
While this recent research shows that potentially women are naturally talented investors, many are still put off by the macho image of the stock market. Hoodless Brennan is hoping its ‘Women in the City’ campaign will build awareness of the opportunities for women and encourage more to invest.
1 Leading financial website and information provider DigitalLook.com reviewed more than 100,000 investment portfolios and found that the average woman’s portfolio has grown more than 17% over the year to 27th May 2005. This compares to a 13% rise in the value of UK shares as a whole* and a rise of just 11% in the average value of men’s portfolios surveyed.
2 According to a survey by the Association of Private Clients and Investment Managers (Apcims) ***Based on investing £1,000 in shares once per month including all charges by independent review site www.moneysupermarket.com as at 1st June 2005.
3 Source: www.moneysupermarket.com, 21 August 2006. Based on trading £1,000 worth of shares once per month.
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