ONEAccording to Fidelity data, 67% of women now invest their savings in the stock market. This corresponds to a significant increase in the volume of active investors in 2018 of 50%. Further research suggests that women not only go public in greater numbers, but also generally outperform their male counterparts. Let’s take a deeper look at a seismic move towards financial inclusivity:
While Fidelity notes that the rise in female investors was a trend that started back in 2018, the emergence of the Covid-19 pandemic accelerated the adoption of investment platforms by women. As lockdowns and social distancing measures emerged, more women acted quickly to prepare for the uncertainty – from setting up their emergency austerity measures to updating their financial plans to evolving from being a saver to an investor.
Roundup investment platform Nutmeg has also noted that the acceleration in the use of investment vehicles by women has increased in the wake of the pandemic. According to annual numbers, in 2020, 40% of new Nutmeg investors were women, while 44% think their investment shift will continue over the long term.
“It’s great to see women take more control of their finances and invest more to achieve their financial goals,” said Kathleen Murphy, president of personal investing at Fidelity. “The past 18 months have been extremely challenging and have created historic stress for many women regarding their finances, job security and long-term savings. However, in working with millions of women across the country, they have clearly demonstrated their ability to persevere and focus on positive financial steps for the future. “
This growing trend for women to adopt investment vehicles can represent a significant opportunity for the industry. As more fintech platforms emerge to facilitate access to investment, female investors offer a new opportunity to attract new clients who are not yet tied to a single company.
Women outperform men
Not only are women becoming more common in the investment world, they are also outperforming their male counterparts. On average, female investors generate positive returns, outperforming men by 40 basis points, or 0.4%, according to an analysis that spanned 5.2 million accounts between 2011 and late 2020.
“It shows that women are great investors and if they take action it can work very well for them,” said Lorna Kapusta, director of female investors and loyalty at Fidelity.
One of the trends driving this outperformance is due to women making more risk averse moves in their investment portfolios.
On average, women trade stocks 49% less than men while they are 67% less likely to fund their accounts, avoiding trading cost-related fees.
This buy-and-hold strategy is a proven strategy that carries far fewer risks than the popular trading approaches men seem to be more likely to use, especially since growth stocks like Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT) have all shown that investing in a single asset can generate significant returns over time.
The path to investing in inclusivity
So why did it take so long for women to start changing the tides in the investment landscape? It seems that the lack of gender equality extends across the financial world.
In venture capital firms, only 4.5% of partners are women, while in private equity only 10% of management positions are held by women. However, we can already see signs that the tides are changing and that the broader financial landscape is becoming largely more inclusive.
While we see more women, especially from the Millennial and Generation Z generations, investing in both the stock market and cryptocurrency, there are still significant differences between women and men in the investment landscape, with men still far more likely to build. Portfolios and buying stocks.
While traditional finance may still suffer from the unconscious biases that lead institutions to market to male investors, emerging fintechs have the opportunity to market themselves in far more inclusive ways.
Maxim Manturov, Head of Investment Research at Freedom Finance Europe, relies on leading fintech platforms to revolutionize the future of retail investing for everyone.
“Revolut, a $ 33 billion global financial technology company, will soon be offering US customers commission-free stock trading for the first time,” explains his license in the US, which enables him to enter the red-hot world of retail with companies like Robinhood and Square to compete.”
This new generation of challenger banks and investment platforms is an excellent opportunity to enter a women’s market that has previously been left behind by traditional institutions. In an increasingly crowded marketplace, gaining the trust and habits of female investors should be a money-making feat for inclusivity platforms.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.