Only 9% of women believe they can outperform male investors. But their lack of confidence, it seems, is not supported by data.
The financial market has historically been male-dominated, but recent studies show that women are gaining ground and achieving superior financial returns.
A study conducted by Warwick Business School in 2018 revealed that female investors outperformed men by 1.8% over the analyzed period. The reason? A more cautious approach that avoids speculation, reduces trading frequency, takes a long-term view, and prioritizes diversification.
In this article, we’ll explore the key differences highlighted in the research.
Behavioral Differences Between Men and Women in Investing
1. Risk and Speculation
Men tend to be more prone to risk and speculation, while women adopt a more conservative approach. The Warwick Business School study showed that male investors trade more frequently in pursuit of quick gains, while women execute fewer trades, avoiding impulsive decisions that can undermine long-term portfolio performance.
Fewer trades by women also translate into lower costs.
This behavioral difference can be explained by psychological influences in decision-making. Men often have more confidence in their financial choices, which can lead to higher risk-taking. Women, on the other hand, tend to analyze their options in detail before investing, favoring safety and predictability.
2. Long-Term Vision
Another important factor is time horizon. Women show a greater inclination toward long-term investments, avoiding short-term strategies that can be volatile and risky. This is reflected in their preference for more solid assets and a lower need for frequent portfolio adjustments.
A report by BlackRock revealed that women generally invest with a clear goal in mind—whether it’s retirement, their children’s education, or wealth building. This goal-oriented approach contributes to more stable and sustainable investment choices.
3. Trading Frequency
High portfolio turnover can harm financial returns due to transaction costs and unnecessary risk exposure. Men tend to trade their assets more frequently, while women hold onto their positions longer.
A study by Fidelity Investments found that women execute 35% fewer trades per year than men. This lower trading activity leads to reduced fees and better preservation of invested capital.
4. Diversification
Among the various factors contributing to women’s superior performance in the financial markets, portfolio diversification is one of the most crucial. Diversification means spreading investments across different asset classes (stocks, bonds, real estate funds, fixed income, etc.), reducing exposure to specific risks and enhancing return stability.
Women demonstrate a natural inclination toward diversification, as their cautious approach leads them to avoid concentrating large amounts in highly volatile assets. Studies by UBS and BlackRock indicate that women are more likely to invest in diversified funds and ETFs (Exchange Traded Funds), rather than betting on a few individual stocks.
This strategy has a clear advantage: by investing in various sectors and asset classes, the portfolio becomes more resilient to market fluctuations. So, when one sector underperforms, others can offset the losses, ensuring greater financial stability.
What to Expect from a World with More Female Investors
Female participation in the financial market is growing rapidly, and this trend is expected to accelerate in the coming years. According to a report by McKinsey & Company, by 2030, women are projected to control about $30 trillion in global financial assets, driven by greater workforce participation and inherited wealth.
With this expansion, the wealth management industry will be directly impacted. Financial institutions will need to adapt their services to meet the needs and preferences of female investors, who tend to prioritize transparency, sustainability, and personalized advisory.
Moreover, the growing female presence could foster a more balanced and less speculative market environment, as women show greater interest in sustainable and socially impactful investments. This shift could lead to a more stable financial sector focused on long-term value creation.
Sources:
Warwick Business School Study (2018)
McKinsey & Company report on women’s projected participation in the financial market by 2030
UBS study on women’s portfolio diversification
Fidelity Investments study on gender differences in trading frequency
