Why Don't Women Invest?

International Women's Day: We ask female fund managers to share their thoughts on why women don’t invest, and why they should

Annalisa Esposito 4 March, 2020 | 9:32AM
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It’s 2020, and while the world has made great strides in equality in diversity in many areas, women are still lagging when it comes to investing.

In the UK there are more funds run by men called Dave than there are funds run by all women. Meanwhile, just 975,000 women opened Stocks & Shares Isas in the most recent tax year, compared with 1.25 million men. Men also typically have more savings into their Isas, at an average of £29,448 compared with £25,836 for women. 

Yet, because women typically earn less through their working life and are more likely to take career breaks to raise a familiy or care for relatives, it is vital that they do invest. Indeed, research has shown that women make better investors because they do a lot of research before making decisions and are more likely to buy and hold, rather than trade their portfolio, which eats into returns.

We’ve asked some female fund managers to share their thoughts on why women don’t invest - and why they should.

What the Experts Say 

Abby Glennie, manager of the four-star rated ASI UK Mid Cap Equity fund, thinks the gender gap in investing is mostly a generational issue that has come from the historic divisions in household roles. “It takes long time to change,” she explains. “But as many stereotypes are being broken down, women investing should as well.” However, she believes women can be  more reticent about investing as they are often more risk adverse and may lack confidence. 

Meanwhile, Alexandra Jackson, manager of the three-star rated Rathbone UK Opportunities, thinks the over-use of jargon in the industry can be very offputting. “There are ten different words to say the same thing, which makes it sound more complicated than it is,” she says. She also points out that it’s still not the norm for women to talk about investment with friends: “I have started to talk about it with my female friends myself, but we don’t do it as much as men.”

Deirdre Cooper, manager of the Investec Global Environment Fund, agrees that jargon doesn’t make life easy and says the topic can be daunting. “The industry is still perceived as the Wolf of Wall Street,” she says. “As an industry we have the duty of explaining jargon in plain English.”

The main problem boils down to a lack of financial education and misconceptions about the industry, adds Lucy Isles, co-manager of the Bronze-rated Baillie Gifford High Yield Bond. “There were preconceptions in the past about women investing and unfortunately there still are,” she says. 

Why Should Women Invest?

“Women should invest because their life expectancy is higher compared to men,” points out Amanda Sillars, manager of the Bronze-rated Jupiter Merlin Growth fund. “They need money to have a comfortable retirement.”

Indeed, a man aged 50 today can expect to live until 84, but a 50-year-old woman has a life expectancy of 87. Yet, women typically retire with a pension pot a third of the size of the average man's savings pot. It is estimated that typically women's retirement income is £7,000 a year lower than men's. 

Glennie thinks women will catch up as gender roles become increasingly balanced. Already women are more likely to take control of the household finances, so why not the investments too? “Women have the skills to invest, and research shows that women are well suited to investing,” she says.

Cooper, meanwhile, says it's not about gender - simply “everyone should invest.” With an ageing population and people having to provide for their own retirement, everyone needs to be thinking about their future, she says. Part of that is the need to consider investing sustainably: “Each person has to play a part to save the world for our grandchildren."

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Annalisa Esposito  is a data journalist for Morningstar.co.uk