As a woman, you are a stronger investor and here’s why

Fareeya Adam, Head of Product Solutions at Momentum Investments

The gender pay gap is still something that haunts women in South Africa and across the world. However, when it comes to investing, women may have slight advantages over their male counterparts.

According to the Fidelity Investments Women Investing Study 2021, which gathered insights into American women’s attitudes and behaviours when it comes to managing their finances, more women are taking a seat at the investing table. In fact, 67% of women are now investing outside of retirement. The percentage is up by 44% in 2018, with millennials equating to 71%, generation X 67%, and boomers at 62%.

On average, the study found that women investors achieve more positive returns and surpass men by 40 basis points, or 0.4%, which was derived from an analysis of annual performance across 5.2 million accounts between 2011 and 2020.

Add to this the 2020 World Health Organization’s Health Life Expectancy report findings, which states that women live longer than men worldwide. This means that, when it comes to money, a woman’s investment journey needs to be more robust.

Fareeya Adam, Head of Product Solution at Momentum Investments has found that her experience as a female investor in South Africa has been similar. “Women tend to take a longer-view perspective and trade less frequently. This reveals a more considered approach by women, with greater focus being placed on the realisation of a financial goal, rather than the thrill of investing. For instance, our studies have shown that the average switches performed per female investor is 3.2% less than the average switches a male investor makes.”

Fidelity Investments’® 2021 Women and Investing Study found that women are investing more of their extra savings on individual stocks or bonds followed by mutual funds or ETFs. It found that women invest their extra savings on Environmental, Social and Governance (ESG) related investments. And around half of them prefer to invest their extra savings on money markets funds or Certificate of Deposits (CDs). This proves that 1 in 5 women report making first-time investments in new asset classes in the past year. In South Africa, we haven’t yet seen a big drive towards ESG investments, but it is becoming increasingly topical.

As the Fidelity Investments’® 2021 Women and Investing Study states, around 90% of women plan to take steps within the next 12 months to help their money work harder to grow. In fact, 62% of women are increasing their understanding of financial planning and investing, 42% feel confident in their ability to save for long term, including retirement. “These numbers show that women are really taking a big step towards understanding and planning for their financial future.,” says Adam.

Women account for around 44% of investment contracts with Momentum Investments, and they tend to prefer discretionary investments to retirement savings. As a female investor herself, Adam says Momentum Investments adheres to an outcomes-based investment strategy that tries to divert clients' attention away from tracking performance and towards their particular investment objectives because staying involved over the long term generates greater returns. “Our model is one that supports the attitudes and behaviors that make women excellent investors and we’re proud to play a role in this.” concludes Adam.