Three developing tailwinds are helping the fairer sex get a fair shake at investing
A lot has been written about how women are getting left behind in the financial sphere. Whether through systemic discrimination or through a naturally tilted playing field, the fairer sex often find themselves falling behind on wages, retirement readiness, and other measures.
But the gap appears to be narrowing, at least based on one aspect. “A greater percentage of men invest in equities than women … [B]y not investing in these assets, women are at a disadvantage,” said Duncan Stewart of Deloitte Canada and Barbara Stewart of Kensington Capital Partners. “The good news is that women are narrowing this investment gap and will soon close it.”
In an article published by the CFA Institute, the couple explained how women are disadvantaged in several ways. The wage gap, the wealth gap, and the retirement-needs gap are three different but related measures that show how women’s quest for financial independence can be decidedly more difficult than men’s.
All those are different from the investment gap, which is narrowing based on two distinct measures. In terms of retail investing, around 60% of men in the US have historically invested in stocks, compared to just 40% among women. But according to a 2017 Gallup survey, the period from 2001 to 2008 saw 65% of men and 59% of women investing in stocks; in the years following the global financial crisis from 2009 to 2017, 56% of men and 52% of women were stock investors.
Women are also gaining ground from an institutional investing perspective. Citing the most recent US data from Morningstar, the couple said less than 10% of money managers are women — a worse female-representation statistic than the 37% among doctors, 33% among lawyers, and 63% of auditors and accountants. “This gap has been a barrier to women investing, since at least some women prefer to work with other women,” they said.
The two predicted that by 2025, there will no longer be a meaningful gender gap in stock-market participation in the United States. One trend supporting this is the acceleration in responsible investing reflected by the growing proportions of sustainable investment assets observed among asset managers worldwide.
That favours the values-oriented approach to stock and fund investment shared by over three quarters of women, based on interviews conducted by Barbara Stewart. It also aligns with research from Morgan Stanley, which found that between 2015 and 2017, percentage of women interested in sustainable investing rising from 78% to 84%; men registered more modest interest, going from 62% to 67% over the same period.
The piece also argued that technology platforms are becoming friendlier for women. Aside from the growing use of crowdfunding and other digital platforms in angel investment, it noted that mobile technology is democratizing the investment process, putting it within the reach of more women than ever.
A shift in global sentiment is also catalysing changes on the institutional investing front. At the inaugural Variant Perspectives Conference, Warren Buffett remarked that a conference about women investors is “way overdue”; female-focused investment forums are increasing in number, and the angel investment market is seeing more women entrants, notably through impact investing.
“As more and more women become institutional money managers across all asset classes, we expect female retail investors will be more willing to invest with women at the helm — especially since female fund managers may generate higher returns,” the piece said.