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Women pip men for investment returns

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07/02/2018
Women are a whisker ahead in the gender investment battle over the past three years, according to research from Hargreaves Lansdown.

It showed that women outperformed men by an average of 0.81% from August 2014-August 2017, adding that if this performance were replicated over 30 years, women would end up with a 25% bigger portfolio.

Yet women remain less confident about investing, opening 20% fewer stocks and shares ISAs than men.

Hargreaves Lansdown attributed this strength to the way women approach investment. Sarah Coles, personal finance analyst at Hargreaves Lansdown, said women are far better investors than they think they are, attributing their success to four main factors:

  1. Women are more likely to have naturally diverse portfolios

44% of women have either most or all of their portfolio in funds compared with 38% of men. This means they have a stake in broader number of companies. Coles said this has the benefit of spreading the risk, so if one share disappoints, it may be offset by growth in others.

  1. Women tend to hold less risky investments

The analysis found women were less likely to invest in riskier assets – such as single company shares of smaller firms or those listed on the Alternative Investment Market. This protected them, to some extent, from losses.

  1. Women are more likely to ‘buy and hold’

Women trade shares 49% less frequently than men, and funds 67% less frequently, so they are not incurring trading costs.

  1. Women are more likely to invest through an ISA

Of those women who do invest, 65% of women invest through an ISA, compared to 58% of men. By investing in an ISA, they are sheltering their investments from income tax and capital gains tax.

Coles added: “Women who invest overwhelmingly have the knowledge they need in order to make sound investment decisions. And rather than working against them, their determination not to take excessive risks with their investments is one of the things that makes them such good investors.

“Of course, this doesn’t detract from the fact that men have also generated excellent returns during the period. In fact, roughly a third of both men and women saw returns of 30% or more over that three year period, which goes to show the success investors have had, regardless of gender.”

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