Having spent the past three years working predominantly with female clients, I am a firm believer that when it comes to investing, women and men approach it differently. Even though I receive some backlash about this idea, there are many surveys to support this.
From my own work I have identified five key differences:
1. Women tend to be more risk-conscious compared with their male counterparts. In a variety of studies over the years, researchers have pointed to economic and evolutionary reasons. It also partially stems from the fact women like to understand investments fully before they commit.
2. Most women do not just care about returns but also how their money is invested. This is where ethical and impact investing come into play. In one study that involved women with household incomes of more than $75,000 (£57,000), nearly all of the respondents said ‘helping others’ and ‘environmental responsibility’ were important. Roughly 60% made purchase decisions based on the company’s corporate behaviour.
3. Women have a tendency to think longer term, and therefore a buy-and-hold strategy is preferred to one involving a high turnover.
4. For many women investing is a means to an end rather than being an end in itself, which favours having an income element.
5. Communication and education play a vital role in helping women understand how their wealth is being invested and managed. This gives them the confidence to participate more actively.
Life through a lens
As a result, I strongly believe the market needs a product that encompasses all these approaches, using a gender lens to invest.
Gender lens investing is becoming a trend. The latest UK addition to the growing fund pool is Legal & General’s ‘Girl’ fund. This fund focuses on investing in 370 of the largest UK companies according to a scoring system based on four metrics: percentage of women on the board of directors; percentage of women executives; percentage of women managers; and percentage of women in the workforce.
According to the think-tank the Criterion Institute, the term ‘gender lens’ was coined in 2009 to refer to investments that consider the benefits for women. In the grand scheme of things it is a fairly new concept, however one I have no doubt has a lot of growth potential in the near future.
There are a variety of products and providers that cater for either one or several of the mentioned aspects, however I could not find one that combined all of these aspects. Therefore it was natural to work on creating such a product myself.
My fund will offer a multi-asset solution that not only invests in female empowerment, but also is designed for female investors and is based on these five key principles.
The fund will be partially capital growth and partially deliver an income. It will have a low turnover with only a few investors, to deliver on points one and five: to comprehensively communicate what is being invested in.
I am very excited to already be in the development stage for a fund that will focus exactly on this and I am hoping for a launch in early November.