Are women better investors than men? It is often said that they are, and when I was speaking on this issue last week for a Barclays Wealth SmartWoman event it is certainly what I found the academic evidence to suggest. There is one big and comprehensive study in the States that it is hard to argue against – Terence Odean at the University of California looked at 150,000 brokerage accounts and found that on average the women were making 1.4% a year more than men. Doesn’t sound like much, but thanks to the magic of compounding it adds up.
So what’s going on here? There are numerous explanations. When I asked Nicola Horlick for her view, she told me that we are natural investors because of our skills as household managers and nurturers. We are hardwired to be cautious and “we have a good natural grasp of balancing budgets”. We aren’t as driven as men to be competitive and to make money fast. We ask about things we don’t quite get and we do better research. All this means that we buy and hold for the long term. Look at Odean’s research and you can see that the men in his study traded 45% more often than the women. And, as I think we all know, in general the more you trade the more you lose.
But is the fact that we trade less and hence do better really down to our natural investing skills and nurturing natures? I rather doubt it. I suspect it can be explained in exactly the same way as the worrying fact that we save and invest much less than men overall. We don’t have time. We all know that men seem to have more spare time than women. But surveys regularly prove it – there was one a few months ago out from the OCED that showed men having more than half an hour a day more leisure time that women.
I reckon the gap is even bigger. There was a lastminute survey a few years ago that suggested the average British man had six hours a day of ‘me’ time. Women have under half that. She does 14 hours of housework a week; he does two. He spends 18 hours a week hanging out with his mates; she spends six. Feminism hasn’t quite finished its work. When it has and women have the same amount of spare time as men, odds are we’ll invest just as much as men, trade as much as they do and find that our performance is much the same as theirs is.