Globally, it’s true that women do invest in shares less than men. In Australia, for example, just 31 per cent of women invest directly in shares compared to 44 per cent of men, according to an Australian Securities Exchange 2017 Investor Study.
And a BlackRock Investor Pulse survey confirmed that women investors tend to be less likely to make risky financial decisions than men.
It’s a strategy that pays off. A number of significant research pieces in recent years have indicated that when women invest in shares they often get higher returns than men. It’s far from definitive but there’s enough fodder to make writing women off as unsavvy investors inane.
A new report from KPMG, based on a survey of more than 1500 retail investors, sheds new light on the different priorities for men and women when buying shares.
The report revealed that female investors place a greater emphasis on reputation, ethics, and social responsibility than male investors on just about every metric.
When making investment decisions, these results indicate female shareholders are significantly more likely to care about ethical behaviour, environmental sustainability, and whether the companies in which they invest are paying their fair share of tax.
I think when the average female investor looks at a company making good annual returns, but being dicey on the ethics front, they see danger
Deborah Yates, KPMG’s national managing partner of people and culture
While the differences on the various non-financial factors were not all wildly dramatic, Deborah Yates, KPMG’s national managing partner of people and culture, says the overall picture was compelling.
“Now it’s vital not to overstate the gap,” Yates observed. “This research also shows that most male and female investors will be in lock-step on most issues. Nevertheless, there are intriguing differences in trial areas that should not be overlooked.”
For example, 65 per cent of women want the companies they invest in to balance the needs of shareholders with employees and community, compared to 55 per cent of men.
Sixty percent of women also want the companies in which they invest to have values beyond just making a profit, compared to 47 per cent of men.
Investing in a company committed to environmentally friendly policies is a priority for 52 per cent of women, compared to 37 per cent of men. And for 70 per cent of women, whether the company pays its fair share of taxes is important, compared to 59 per cent of men.
In trying to analyse what this means, Yates cautions that relying on the traditional rhetoric that women are “more empathetic, more sensitive, or just ‘nicer’” is too simplistic.
“I think we should be extremely wary of this view. There is nothing in our biological makeup to suggest men are likely to be better investors.
“Indeed, much of the recent data suggests stereotypically feminine traits might actually be more correlated with success in the field.”
Good corporate citizenry
Her theory is that women view what they consider to be an absence of ethics and good corporate citizenry as markers of risk.
“Certainly, I think it’s likely that when the average female investor looks at a company making good annual returns, but being dicey on the ethics front, they see danger,” Yates says.
“But a company that puts its customers and employees ahead of short-term profits is one that is likely to be a better investment over the long run.”
Makes sense to me. And in many cases, it’s making money for women, too.