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Male v female investment styles By Sam Barrett
You can argue for weeks about whether men or women make better drivers, cooks or business leaders, but when it comes to investing, the statistics speak for themselves. When picking investments, women consistently outperform men. Industry research finds that the average female portfolio delivers better performance than its male counterpart. In 2006 more than 100,000 portfolios were studied, and while the FTSE All Share Index had risen by 13%, the average male portfolio had increased by 11% and the average female portfolio by 17%. This wasn't just a one-off result. In 2001, while the stockmarket fell by 22% and the average male portfolio by 26%, the average female portfolio beat the lot by growing by 2%. Testosterone-driven Clearly, analysing what men and women do when it comes to picking their investments could benefit the investment performance of both sexes. From the trading floor to the upper echelons of fund management companies, men dominate the investment arena. Perhaps because of this, men tend to be much more confident when it comes to investing. Research has found that while just 19% of women felt they had a comprehensive understanding of investments, this figure soars to 31% of men. Additionally, 54% of men would be happy to put a significant amount of their money into high-risk investments, compared with 43% of women. Although hot tips can cover any sector of the market, when examining where the male pound goes, certain areas prove particularly popular Men tend to invest in stockmarket fads such as technology, mining and oil and gas stocks - stocks that have performed well, but are volatile. The next big thing Another characteristic of the male investor is that they're the more active of the two sexes. Men trade on average five times compared with women's three trades - but with returns lower than their female counterparts, this suggests that they're not always selling at the best time. As well as more research, women also have a different approach to deciding where they put their money. Industry research supports this. It found that female investors preferred certain sectors, with leisure, food and drink, retail and utility companies all favourite purchases. A learning curve As well as researching and understanding what they invest in more than their male counterparts, women also appear to dedicate more time to learning about investing in general. With such different investment strategies there's plenty that each sex can learn from the other. For men, more thorough research is probably top of the to-do list. This is something that Assegai, an all-male investment club, has done to good effect. It has a fairly stereotypical investment portfolio, with five holdings, of which two are mining companies and a third a biotechnology company, but each is chosen following extensive research. This research-based strategy has certainly paid off for the Assegai members. In each of its five years it has achieved double-digit growth, including 50% in 2004 and 60% in 2006. Letting go As well as undertaking more detailed research, men could benefit from adopting the less involved approach that women use - and use 'stop-loss alerts'. Although women get better results than men, there are areas where the male approach could benefit women's investment strategies. By plumping for companies that they know, women's portfolios are predominantly in the FTSE 100. Women also have portfolios that are in danger of becoming overweight in certain areas, such as retail and food and drink. This means that they could be missing some investment opportunities, as well as leaving their portfolios vulnerable to downturns in these sectors. Women could benefit from supplementing their research with the business pages of the newspapers, which provide useful insights into the corporate arena. But while dissecting the investment strategies of the sexes can highlight what we do well and what we do badly, perhaps the best approach to making money is to combine forces.
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