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

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.

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.

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.

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.