What makes women better investors?

Stereotypes still abound … but the returns don’t lie

OVER THE last decade, a plethora of studies have found that women make better investors than their male counterparts.

More recently, an analysis of five million Fidelity accounts over a 10-year period showed that US women’s returns were 0.4% higher than men. This difference is even higher, according to a Berkeley study, which showed that women’s returns were nearly 1% higher.

Warwick Business School in the UK found that among stock market investors between 2012 and 2016, the annual return by the men was 0.14% above the performance of the FTSE 100, versus the 1.94% annual gain achieved by women.

A separate study by Hargreaves Lansdown, the UK’s biggest consumer investment platform, found that women investors returned on average 0.81% more than men over a three-year period. It may not sound like much, but Hargreaves points out that if this pattern were to continue for 30 years, the average woman would end up with a portfolio worth 25% more than the average man.

It is difficult to generalise or to ascertain if this is idiosyncratic, but there are some key characteristics that women tend to possess that may account for their outperformance in the market…