Data does not support the idea that women - at least those aged 45 to 64 - are more conservative. File photo. Photo: 123RF
We often hear that women are more conservative investors and that this can cost them in the long run.
But is it really the case that women inherently want less risky investments, or are there other factors at play?
Turns out, the evidence might be more mixed than you expect.
The problem for women
Women investors face a few hurdles.
As a whole, they are still paid less than men in New Zealand - the gender pay gap sat at more than 8 percent in the middle of last
year - about half what it was in 1998.
We also have a savings and investment gap. ANZ, the country's biggest KiwiSaver provider, said its male members had an average $6000 more than women. Westpac said while its KiwiSaver gender gap was shrinking, it would take 15 years on current trends to close.
The gap may be driven both by women's lower salaries overall and the tendency for women to be the ones who give up work, reduce their hours, or choose less well-paying work to cater for family commitments.
What's the problem with conservative?
The other part of the picture is that women overall are in less risky investments.
ANZ said women in its scheme were more conservative investors. About 60 percent of the investors in its high growth fund are men.
The same was true at Westpac, where there were more men in the high growth fund than women.
Westpac general manager of product, sustainability and marketing Sarah Hearn said in February this year, 25 percent of women had some or all of their Westpac KiwiSaver investments in a growth or high growth fund, compared to 27.8 percent of men.
This matters because, over the long term, people who take more risk with their investments should achieve better returns.
Morningstar data shows that over 10 years, aggressive KiwiSaver funds have returned 9.3 percent a year compared to 4.2 percent for conservative options.
But why?
We are often told that women are just more risk averse than men, and that's why they opt for conservative investments.
But the NZ Society of Actuaries released a report that said data did not support the idea that women, at least those aged 45 to 64, were more conservative.
"Instead, both men and women tend to be invested in lower risk/lower return funds if they have small balances and invest more in growth assets if they have larger balances. From age 60 both men and women become increasingly likely to be in lower risk/return funds, especially women. Only among the over-65s do women clearly appear more conservative investors than men."
Researcher Ayesha Scott, of Griffith University, pointed to other research that showed women investors tended to be offered less risky portfolios by their advisers because there was a perception they were more risk averse - whether they really were, or not.
"The actual findings of the article suggest risk preferences aren't the biggest factor, gender of investor/analyst pairs may be. That is, female investors tend to react more strongly to analyst reports written by females, implying that having more women in the investment industry may lead to female investors taking a more active approach to their portfolios."
KiwiSaver provider Generate said receiving financial advice had been important for its members - it has a strong advice component and said 55 percent of its growth fund members were women.
ANZ Investments managing director Fiona Mackenzie said sometimes it could be that women's "mental load" was at play, if they were also juggling family commitments and work as well as making investment decisions.
"Women wanting something easier is part of it.
"When I reflect back on my time on Wall Street, in the US market back then, there were not a lot of senior female traders. Women tended to gravitate towards sales rather than trading. But when I switched to the Asia market, a number of women were heads of desks on the trading side. Taiwan, South Korea... they had really senior women, if not heads of desk.
"The research in the institutional investment space does show women tend to be very good traders, we tend to take a more multifaceted approach to risk, we are much more comfortable cutting losers. Men tend to hold on to their losers and keep hoping they will revert."
Financial adviser Rachelle Bland agreed that many women were too busy looking after their families and households, and might put learning about money and investing on a to do list they never got around to.
"My female clients are great investors. But when they first come to see me, they can be nervous about asking dumb questions - of course there are never any dumb questions.
"Men can often be more confident with money because they are exposed to it more, but that can also lead to an overconfidence bias, which can have disastrous effects."
So what can we do about it?
Mackenzie said women could think about whether it was possible for them to take more risk, if they had a long investment horizon and it was suitable for their circumstances.
"When it comes to taking individual action to close the gender savings gap, I think it's important to focus on controlling the controllables," Mackenzie said.
"Being in KiwiSaver, checking your contribution rate and taking the right amount of risk for your situation.
"So, if you are young, you are in a better position to take more risk as you have a longer timeframe to withstand the ups and downs from volatile markets.
"We aren't saying that every young woman should be in a high growth fund. But we would encourage everyone to stop and check they are in a fund that suits their age, life goals and tolerance for risk."
She said people should review their fund choice annually to make sure it was still right for their needs.
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