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Cue the Stereotypes…
- Men never admit when they are wrong (read – overconfident).
- Men never ask others for directions/advice when they need it.
- Men don’t listen to other people that well.
- Women let their emotions guide them too much.
- Women take forever to make a decision.
- Women tend to leave the household finances up to men.
Not surprisingly based on the history/lack of use-fullness of stereotypes, these stereotypes don’t really help us too much to make an informed decision about whether men or women have a better track record as investors.
Men vs. Women Stock/Mutual Fund Investing Track Record
- Value Walk recently reported that between 2000-2009, hedge funds run by women returned 9% on average, compared to only 5.82% for hedge funds run by men. This was despite the fact that 97% of hedge funds are run by men.
- Side note: During this same time, the S&P500 index returned -26%. Yikes!!
- The Wall Street Journal recently reported that several finance professors performed a study which found that women’s risk-adjusted annual returns were 1% higher than that of men.
- Vanguard (my personal favorite for low cost investing) reported in 2011 a large number of comparative facts between men and women investors:
- Women are 10% more likely to join their employer’s retirement plan – a definite benefit for tax-sheltered investing.
- Women save 10% more of their income than men.
- Women are about 10% more likely to be better diversified with fixed income investments than men (which protects their nest egg in the event of a market decline).
- From 2007-2009 (during the market decline), men were 10% more likely to abandon stocks than women. This enabled women to take advantage of the huge increase in stock prices that followed from March 2009-present.
- In 2001, a study found that men were 45% more likely to make frequent trades than women. As passive investing knowledge dictates, frequent trading decreases returns, more often than not.
In my opinion, the facts above CLEARLY establish that women are indeed better investors and have a better track record than their male counterparts. And, not only this, I think that the facts shared by the Vanguard article are sufficient evidence for WHY this is the case as well.
What About Investment Areas Outside of Traditional Stocks/Mutual Funds?
***Photo courtesy of http://www.flickr.com/photos/johnthescone/2541001551/sizes/l/in/photostream/