Merryn's Blog

The 1960s stereotype the fund management industry just won't drop

There’s a popular and long-standing myth that women are ‘better’ investors than men. But it’s just not true, says Merryn Somerset Webb.

Stereotypes die hard.

Back in 1963 the son of the prime minister, Maurice MacMillan, gave a talk at the House of Commons in his capacity as chairman of the Wider Share Ownership Council.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

He noted that 1.5 million of the 3.5 million shareholders in the UK at the time were women, and announced that he felt they should be more active in the City. He thought they would bring "common sense attitudes and approaches" with them that would "lighten City solemnity" and knock out its "often incomprehensible jargon".

This idea that women can somehow bring a sense to investing that men can't grasp is fascinating in its longevity. Here's a recent article about IFAs, and how it is time for the sector to "ditch the macho culture" to get more female advisers in.

Advertisement - Article continues below

Why? They are socialised to somehow be "more ethical in their treatment of clients" and to be more "loyal and conscientious". They "pick up on things" better than men and are "far more disarming when dealing with stroppy clients". And of course they "feel" for their clients more than men.

Here's another.This one explains why women are better hedge fund managers than men (more risk averse, apparently) and another along the same lines claiming that women are "mostly better" investors than men.

Is any of this true?

Lots of people think so, and a good many male managers like to think they can boost their equality credentials by going on about it (to me at least). But the answer so far is that there is absolutely no evidence to back it up.

Surveys of individual trading accounts in the US which show female accounts outperforming don't, on closer examination, show us that women are better stock pickers than men. Instead, the only reason the female-run accounts outperform on average is because they tend to be traded less than the others, and because those lower trading costs compound to make the difference.

That doesn't tell me women are better at investing than men. It tells me something else that middle-aged women with spare cash have less spare time than middle-aged men with spare cash.

Advertisement - Article continues below

And the studies that show female hedge fund managers are better than male ones? They don't tell me that the average female is better than the average male. They tell me that the average woman who bothers to make her way to the top in the very, very male world of hedge fund management is likely to be way more ambitious and significantly better at her job than the average man who makes it to the top of the same world.

It's that simple.




The power of mean reversion

When it comes to investing in funds, don’t chase the top performers – look for the cheapest ones.
1 Apr 2019

The most important number to look at before you buy any fund

Many investors get distracted by past performance when they buy a fund. But there’s something else to consider that will have a much bigger influence …
22 Mar 2019

Why investment trusts are the best vehicle for your money

Max King explains the advantages of investment trusts – sometimes called closed-ended funds – over their open-ended counterparts (or Oeics).
11 Feb 2020
Share tips

Asian income stocks: where to find the continent's top money machines

International dividends shouldn’t only mean companies in the US or Europe – the Far East has plenty of big payouts to offer. Cris Sholto Heaton looks …
6 Feb 2020

Most Popular


Here’s why the Federal Reserve might print more money before 2020 is out

The Federal Reserve wants to allow US inflation to run “hot” for a while. But that’s just an excuse to keep interest rates low – and possibly print mo…
10 Feb 2020
Investment strategy

The secret to avoiding being panicked out of your portfolio

With the coronavirus continuing to occupy headlines, investors still aren’t sure how to react. But the one thing you mustn’t do is panic. Tim Price ex…
11 Feb 2020

Money Minute Monday 10 February: lacklustre growth in the UK and Europe

Today's Money Minute looks ahead to the week's GDP growth estimates for the UK and the eurozone, plus inflation figures for the USA.
10 Feb 2020

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019