Women get better results long term: Stockspot

09-Nov-2015

By Kristen Crawford

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A growing body of research indicated women were more successful long-term investors than men, despite their lack of representation among the world’s most noticed success stories, according to online investment adviser and fund manager Stockspot.

“In 2013, a study found that hedge funds run by women returned 9.8 per cent compared to 6.1 per cent by men that year,” Stockspot chief executive Chris Brycki said in a recent blog.

“A different [United States] study of 750,000 portfolios in 2014 also found women earned higher median returns than men.”

A number of stereotypes were used to explain the trend of women’s superior performance, ranging from men’s testosterone clouding their judgment to women being calmer under pressure, Brycki said.

Considering Stockspot data, he said the first clear trend the group noticed was that its male clients were comfortable taking more risks.

“On the other hand, female clients prefer to be less exposed to market movements,” he said.

“Only 27 per cent of our female clients are comfortable taking on more risk to target higher returns, compared with 41 per cent of our male clients.

“On its own this would suggest that men should perform better over the long term, since they are more willing to make more risky and higher-yielding investments,” he said.

“However, since the data suggests this is not the case, there is probably a more important factor at play – confidence.”

Too much confidence could mean investors ended up believing they had more control over short-term investment returns than was the case, he said.

“Our data suggests that overconfidence does impact men more than women when it comes to investing because men tend to act more often,” he said.

“The US found the median portfolio turnover [how often investments in a portfolio are purchased and sold] for women was 9 per cent per year, compared to 14 per cent for men.

“Higher turnover means men incur extra costs and are more likely to be buying and selling at the wrong times because they are chasing returns.”

Meanwhile, where men were too confident, many women lacked investment confidence and therefore avoided even sensible risk, he said.

“This is unfortunate because women who do invest tend to stick with their strategy and achieve good results,” he said.

“Of our female clients, 44 per cent said they would stick to their investment plan if markets fell, compared to 31 per cent of men.”

Women were also more disciplined long-term investors, he said.

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