Gender equity leads to better balanced investing
Female investors place a greater emphasis on reputation, ethics, and social responsibility than male investors on just about every metric, according to new KPMG Acuity research.
Now it’s vital not to overstate the gap. This research also shows that most male and female investors will be in lock-step on most issues. Nevertheless there are intriguing differences in key areas that should not be overlooked.
More so than men, women want the companies they invest in to balance the needs of shareholders with employees and community (65 percent v 55 percent). More so than men, women want the companies they invest in to have values beyond just making a profit (60 percent v 47 percent.) More so than men, women want the companies they invest in to be committed to environmentally friendly policies (52 percent v 37 percent).
So what can we make of this?
Wrong to assume women are being ‘nicer’
A traditional read might be to suggest that women are more empathetic, more sensitive, or just ‘nicer.’ 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.
Warwick Business School recently tracked the performance of 2,800 investors over three years. The men in the study outperformed the FTSE 100 by 0.14 per cent. The women outperformed the benchmark by 1.8 per cent. Another three-year study by Hargreaves Lansdown, the UK’s biggest consumer investment platform, found women returning 0.81 per cent more than men. It’s far from conclusive, but it’s certainly food for thought.
Of course, theories for why female outperformance might occur are highly contested. But one thing the BlackRock Investor Pulse survey found is that women investors tend to be less likely to make risky financial decisions than men. This places this new KPMG Acuity research in an interesting light.
Perhaps women are not trying to be ‘nice,’ but rather that they see an absence of ethics and good corporate citizenry markers as a risk. Certainly this would be my theory.
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. 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.
Women may be more rounded investors
There’s also an argument that women are more engaged in the community, especially as customers, and therefore the rising primacy of customer-centricity may be concept that sits more intuitively. Certainly it is clear from these results that women investors are more likely to take a broader view of what constitutes value.
It’s now cliché to note the world is more intricately interconnected than at any other point in time. Yet there remains a stubborn tendency among some investors to view companies as discrete entities operating within specific silos. The broader role for companies today as good corporate citizens – as moral agents – is one it seems female investors may be more in tune with.
Perhaps it is no coincidence that as women start to fill their rightful places in the investor community, and in roles of influence more broadly, we are seeing CEOs similarly redefining their roles in society. For a business leader to take a public position on an issue like same-sex marriage or Indigenous constitutional recognition would have been anathema a generation ago.
Yet as a more gender-balanced, truly representative world emerges, it is likely we will see this trend continue and get rewarded.
Read the full report: Shareholder value: Shareholder values.