For many years we have heard about how individual women approach investing differently to men and make more money (on average 0.40% pa).
Women tend to invest for longer, don’t try and time the market, are generally more risk-averse than men. Men engage in 45% more trading activity than women, while women focus more on the big picture. Numerous studies have shown these patterns over time for individual investors, with women being more prepared to ask for assistance and education, instead of assuming that they know the answers
Now we can see that these trends apply for fund management teams as well.
A recent Willis Towers Watson research paper (of 1,500 fund management teams around the world) shows that fund management groups that hire more women achieve bigger returns than most male-dominated teams, with the top quartile (of proportion of female investors) outperforming the bottom quartile (of proportion of female investors) by nearly half a percentage point each year on average – a total of 4.60% every decade.
The reasons for this include the attributes that women bring to the team, with cognitive diversity, more flexibility and adaptability. Women may bring a more patient focus on ‘consistency of returns’, with sustainability (ie ethical) funds being more noticeably female.
However, although these leading performers have women in the team, some of those teams still had fewer than 1/3 of the team being women.
Moneyworks are aware of the diversity in the investment professionals of the fund managers that we recommend, with many of the fund managers having women at senior levels. We anticipate that this will change over time as more women realise what an interesting and rewarding (both financially and personally) career making investment decisions is.