Yahoo Finance A world where women control 50% of investments: What does that look like?
Australian women make up half of the national population, but only 18 per cent of active investors.
They’re also less likely to hold shares (14 per cent) than their male counterparts (24 per cent), new research from Sharesies has found.
However, change is coming.
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Of the new entrants to the ASX in 2020, 45 per cent were women - an increase from 31 per cent in 2015, the annual ASX investor study revealed. And women make up 51 per cent of those intending to invest.
By 2025, women around the world are expected to hold $142 trillion in assets.
When women do, finally, reach parity in both the number of investors but also funds deployed, the consequences will have stratospheric ramifications for equality, the environment, the investment industry and even the pension system, experts have said.
A shift to index investing
“[Investment parity] is an interesting hypothetical and a realistic one because the world will continue to move in that direction,” online investment platform Stockspot founder Chris Brycki told Yahoo Finance.
“You can look at it from an individual level and then at a product and industry level. For an individual woman, what that means is that the more women that invest, the more it's going to close the wealth gap.”
As women achieve greater returns from their money, that means they’ll be able to participate in other assets like property to a greater deal. It also means that by retirement, women should have more funds, he said.
The 47 per cent retirement gap should naturally then reduce, freeing up funds the Government would have previously spent on the pension system.
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“From a product perspective, one of the big trends that has been happening that has been accelerated by women investing, is the shift towards index investing and passive investing,” Brycki added.
“The fact that women only make up a tiny percentage of active traders, tells me - at least from the way that women may perceive it - that trading is more like sports betting, which I actually think it is.”
Women make up less than one-in-five active online investors, according to the 2020 Investment Trends online investment report.
Brycki predicts that as women make up greater numbers of investors overall, products like exchange-traded funds and index funds will rise in popularity. At the same time, investors will steer away from purchasing direct shares.
Ethics, sustainability at the fore
Women are also more likely to invest with sustainability and ethics at the front of their mind.
A recent study from the Canadian RBC Wealth Management firm found that women were more than twice as likely to describe environmental, social and governance (ESG) factors as extremely important in their investment decisions.
Additionally, women are more likely to expect their superannuation is invested ethically, the Responsible Investment Association of Australia has found.
“While all investors are looking for the potential return of their investment it is true that the importance of ESG and ethical factors is rising in the decision making process for all people, and especially women,” director of the Australian Shareholders’ Association Lelde Smits said.
“As women make up a large percentage of new investors they are at the forefront of this emerging trend, that is increasingly becoming a standard. In addition, ESG investment can be complementary to a range of investment strategies as it functions as an overlay identifying key issues of importance.”
Diversity and inclusion
CEO of micro-investing platform Sharesies Brooke Roberts has also observed that the new breed of investor is more likely to put their money behind projects and companies that align with their values.
She believes the increase in female investors will also trigger a greater focus on diversity and inclusion at the product level.
“If there are more women investing, as we see more women investing with their goals and their values … hopefully we’ll see that gender pay gap go away and we’ll see more diversity in a broader sense in companies,” she said.
In a conversation with Bank of America, head of sustainable and impact investment strategy at Merrill and Bank of America Private Bank Jackie Vanderbrug said part of the reason is that for many women, investing and charitable giving are intertwined.
“Giving and sustainable investing are complementary tools. Philanthropic giving alone is not sufficient to make the change many people want to see in the world,” she said.
“Investments offer the potential to use market forces to make change at scale—but may be limited by required returns or size. When combined, philanthropy and sustainable investments help increase your opportunity to drive positive social and environmental outcomes.”
The Australian Shareholders’ Association’s Smits believes that as more women seek out greater returns on their money, the investment game will irrevocably change.
“More news media sites and investment organisations will adapt to speak directly to this growing audience,” she said.
“‘Following the money’ will become ‘following the female investor’ and this in turn will likely broaden the investment opportunities women are aware of, and actively investing in.”
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