We all know that men and women are different, but can women invest as well as men? Read on with Personal Loans Now to discover some fascinating differences between male and female investors.
- What Nutmeg analysed
- What Nutmeg’s market analysis showed
- Whether the Nutmeg survey is supported by other research
- What are the other key differences between male and female investors
- Whether male or female investors perform better
Differences Between Male & Female Investors
The stereotypical picture of a woman investor is that she is less capable than her male counterpart. She is said to be lacking in confidence and experience in financial decision-making and less likely to take risks. But how far is this true? A recent analysis of Stock Market behaviour has revealed some interesting data about the fundamental differences between male and female investors. After looking at what Nutmeg’s statistics tell us, Personal Loans Now, offering access to cheap loans online, turn to other research to see how far this information is reliable or whether it’s just a one-off. We consider other key differences between the investment behaviour of men and women before deciding which sex performs better.
What did Nutmeg Analyse about Male and Female Investors?
Nutmeg, the online wealth management firm, analysed the past 6 years of investment data (2012-18). They compare and contrast the differences between male and female investors’ behaviour during periods of UK Equity market volatility. They chose 4 major events:
- the period of Greek debt (June 2013)
- the Scottish Independence Referendum (October 2014)
- the China market ‘bubble’ (September 2015)
- the market correction of February 2018
On each of these occasions, the FTSE 100 lost an average of 8.7% over a period of 4 weeks as investors reacted to the new. But what exactly did they do?
What did Nutmeg’s Market Analysis Show?
Nutmeg found that the vast majority of investors didn’t change their investment strategy during periods of market volatility:
- 97.6% stuck with their investments
- 2% adjusted their portfolio so that they increased, rather than decreased, the risk
- 0.4% withdrew their money
The most interesting statistic was that male investors were four times more likely than females to get cold feet and withdraw their money when markets dipped. This tends to go against the perceived image of women as more risk-adverse and having less experience. This strategy is commonly regarded as the best course of action.
Shaun Port, Nutmeg’s Chief Investment Officer, said that the female investors who stayed the course ended up in a much better financial position in the long term than the men who cashed in or reinvested elsewhere. This is because the general rule of investing successfully is that short-term market losses and gains shouldn’t cause you to lose sight of your long-term investment goals.
Is the Nutmeg Survey Backed up by Other Research?
The findings of Nutmeg are nothing new since previous research (both by financial and academic institutions) has drawn exactly the same conclusions.
A 2016 survey by Wells Fargo analysing investment data for 2010-15 found that men were six times more likely to make trades in a period of Stock Market instability. They explained that male investors tended to be overconfident in their investment capabilities. However, they had lower returns than women. Partly because they couldn’t always get the timing right on successive trades, and partly because they had to pay out more in fees for all these transactions.
A Fidelity Investments Survey in the same year agreed with this key difference in male and female investors. They say men were 35% more likely to trade than women when the markets were falling.
What are the Other Differences Between Male and Female Investors?
Apart from the ability to sit tight and wait out a crisis, research has found other differences between the behaviour of male and female investors. Personal Loans Now, offering access to some of the best personal loan rates in the UK discuss these differences.
Who Performs Better, Male or Female Investors?
Research would tend to suggest that women’s reluctance to trade during periods of volatility makes them slightly better investors than men. Fidelity Investments has analysed its 8 million clients and say that women perform better than men by 0.4% while a report by the University of California, entitled ‘Boys will be Boys’, found that women outperformed men by 1% because of men’s tendency to trade too much.
What Can I Conclude about the Differences between Male and Female Investors?
There’ve been attempts to explain the research by emphasising the anatomical differences between the brains of men and women. However, it would seem that environmental and behavioural factors may play a more important role. Men tend to be let down by their overconfidence (especially in their ability to ‘predict’ the market) and their reluctance to ask for advice. Given the results of successive research, it seems a pity that more women don’t involve themselves in the stock market. Women have so much to offer as investors.
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