MARCH 8th International Women’s Day always brings a flood of reports about gender inequalities in from health results to pay and advertising. But one gap is steadily narrowing: that in wealth. As money managers seek to appeal to and serve wealthy women, so that as those women express their ideals through their portfolios, the impact will be felt within the investment industry and beyond. 72trn, 32% of the full total. And the majority of the private wealth that changes hands in the coming decades will probably go to women.
Upgrade your inbox and get our day to day Dispatch and Editor’s Picks. One reason for women’s growing prosperity is that far more of these are in well-paid work than before. All this will have big implications for asset managers. Take a risk-profiling. Surveys show that men’s behavior to risk are typically more gung-ho, whereas women will buy and hold, that leading advisers to conclude that men are less risk-averse. And men are more likely to say that they understand financial concepts, which might appear to suggest that they are more financially literate.
But it may be more accurate to say that women are more risk-aware and less deluded about their financial competence. A study in 2001 by Brad Barber and Terrance Odean, academics in the field of behavioral finance, showed that women outperformed men on the market by one percentage point a yr. The primary reason, they argued, was that men were much more likely to be overconfident than women, and to carry out unprofitable investments hence.
A few investment firms focusing on wealthy women are springing up, such as Ellevest (motto: “Invest Just like a Woman”). Other money managers are seeking to hire female advisers and establishing dedicated groups for female clients. Some have taken the daring step of earning women more prominent in their marketing materials.
“It’s critical for our business that people recognize the trend of increasing women’s prosperity and respond properly,” says Natasha Pope of Goldman Sachs. That response goes well beyond better communication with women. It means recognizing that women, particularly younger ones, will look for advisers who can help them choose a way that is consistent with their ideals.
In a recently available study by Morgan Stanley 84% of women said they were interested in “sustainable” trading, that is, targeting not financial returns but social or environmental goals just. The figure for men was 67%. Matthew Patsky of Trillium Asset Management, a sustainable-investment firm, quotes that two-thirds of the firm’s direct clients who are investing as individuals are women. Among the lovers who are joint clients, trading sustainably has typically been the wife’s idea. The latest trend within a values-driven investing is to use a “gender lens” to make investment decisions.
- Deposit BTC (or ETH) into Binance. Select “Funds”” and click “Deposits Withdrawals”
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1.3bn have been raised by mid-2017 for trading with a gender-zoom lens. Much like green investing, a gender lens comes in different strengths. Mild variations include mainstream money and exchange-traded funds (ETFs), such as the SHE-ETF by State Street, that filter detailed companies with few women in senior management. Super-strength variations include funds that invest in projects benefiting poor women in developing countries. These could make it clear that they provide higher financial risk or lower comes back, which traders may acknowledge as a trade-off for the nice that they actually.
In any investment strategy led by a single issue there is certainly the risk of overexposure to certain sectors or companies. Lisa Willems of AlphaMundi, an impact-fund manager, says she tells clients who ask for a “gender finance” -as an endowment did recently-that gender “is a lens, not just a bucket”. Quite simply, it ought not to be regarded as a secured asset class alone.