Rise of Women in Investing: Number of Female Investment Accounts Accelerates in Big Step for Financial Inclusiveness

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AAccording to Fidelity data, 67% of women now invest their savings in the stock market. This represents a significant 50% increase in the volume of active female investors in 2018. Other research suggests that not only are women entering the stock market in greater numbers, but that they are generally outperforming their male counterparts. Let’s take a closer look at a seismic step towards financial inclusiveness:

While Fidelity notes that the rise of female investors was a trend already emerging in 2018, the emergence of the Covid-19 pandemic has accelerated the adoption by women of investment platforms. As closures and social distancing looms, more women have acted quickly to prepare for the uncertainty – from building up their emergency savings to updating their financial plans and the evolution of their role from saver to that of investor.

Roundup investment platform Nutmeg also found that the acceleration of women adopting investment tools has increased in the wake of the pandemic. According to annual figures, 40% of Nutmeg’s new investors in 2020 were women, while 44% believe their transition to investing will continue for the long term.

“It’s great to see women take more control of their finances and invest more to help them achieve their financial goals,” said Kathleen Murphy, President of Personal Investing at Fidelity. “The past 18 months have been extremely difficult and, for many women, have brought historic levels of stress to their finances, job security and long-term savings. However, by working with millions of women across the country, they have clearly demonstrated their ability to persevere and focus on positive financial action for the future.

This growing trend of women adopting investment tools may present a significant opportunity for the industry. As more fintech platforms are launched with the aim of making investing more accessible, female investors represent a new opportunity to gain new customers who have not yet been loyal to a single company.

Women outperform men

Not only are women more and more present in the investment world, but they are also surpassing their male counterparts. On average, female investors earn positive returns and outperform men by 40 basis points or 0.4%, according to an analysis of 5.2 million accounts between 2011 and the end of 2020.

“It shows that women are great investors, and when they take action it can work very well for them,” noted Lorna Kapusta, Head of Women Investors and Customer Engagement at Fidelity.

One of the trends behind this level of outperformance is that women are making more cautious moves in their investment portfolios.

On average, women trade stocks 49% less frequently than men, while funding their account 67% less frequently, avoiding the fees associated with trading costs.

This buy and hold strategy is a proven strategy that carries much less risk than popular business approaches that men seem to take more frequently, 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 inclusiveness

So why has it taken so long for women to start changing trends in the investment landscape? It seems that the lack of gender equality extends to the entire world of finance.

When it comes to venture capital firms, only 4.5% of partners are women, while only 10% of management positions in private equity are held by women. However, we can already see that the tides are changing and the broader financial landscape is becoming vastly more inclusive.

While we can see more women, especially Millennials and Gen Zs, investing in both the stock market and cryptocurrency, there are still significant gaps between women and men in the investment landscape, with men still much more likely to turn to construction. portfolios and buy stocks.

While traditional finance can still suffer from the unconscious biases that push institutions to look to male investors, emerging fintechs have the opportunity to market themselves in a much more inclusive way.

Maxim Manturov, Head of Investment Research at Freedom Finance Europe, looks to leading fintech platforms to revolutionize the future of retail investing for all.

“Revolut, a $ 33 billion global fintech player, will soon be offering commission-free equity trading to US clients for the first time,” he explains. “In addition, the start-up should soon announce that it has obtained a broker-trader. licensed in the United States, which allows it to compete with Robinhood and Square in the scorching world of retail.

This new generation of challenger banks and investment platforms has a great opportunity to tap into a female market that was previously overlooked by traditional institutions. In an increasingly congested market, gaining the trust and custom of female investors is likely to be a profitable achievement for platforms that advocate inclusiveness.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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