Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 347

Women investor numbers grow but financial education still lags

International Women’s Day 2020 coincides with the release of the latest online investor research from Investment Trends, based on a survey of more than 13,000 Australians. So there is no better time to look at key trends in the retail investing space from the perspective of women investors.

Our latest research shows that women still make up only 18% of the 750,000 active online investors across Australia. But the good news is this gap is closing.

In recent years – and particularly through 2019 – the proportion of Australian women who began investing for the very first time grew substantially to 28% of that cohort. This is more than double the rate observed five-plus years ago, as shown in chart 1 below.

While more work needs to be done to lift the ratio of women investors, Australia is substantially ahead of established markets such as the UK (11% women, 89% male) and is drawing closer to the US (21% women, 79% male).

Improving investment knowledge

For women, knowledge and education are central to their investment journey.

Our research shows that women who invest have a strong desire to expand their knowledge and further educate themselves on investments and investing.

Women most often rely on their own research and company-produced reports as a foundation for making investment decisions - which is similar to their male counterparts.

But they are substantially more likely to collaborate and discuss ideas with their friends and family members (37% cite this vs 28% for males).

Women are also more likely to:

  • seek out the views of prominent investors and commentators (24% versus 22%)
  • listen to investment-related podcasts (19% vs 17%)
  • rely on investment-related online forums and blogs, with the Barefoot Investor a firm favourite (36% vs 19%).

The same is true for women who want to begin their investing journey in the next 12 months. This group – to a vastly higher extent than men – want to start by investing small amounts of money (52% vs 33%). And they are significantly more likely than men to want education, a good understanding of how to manage risk and the ability to share and learn from the experience of others (see chart 2).

It is no coincidence, then, that both in Australia and globally, women investors have increasingly embraced low entry cost products that rely largely on exchange-traded funds, such as microsavings apps and robo-advice services.

Investing globally and sustainably

Right across the Australian investor population, our research has tracked a growing investment demand in two areas:

  1. international markets
  2. environment, social and governance.

Currently, over half of the online investors surveyed say they invest in international assets in some shape or form, a proportion that is roughly similar across gender lines (50% for women and 55% for men).

But the propensity to add overseas investments to their portfolios is strongly linked to investing experience. The longer a person has been investing, the more likely they are to seek exposure to investments outside Australia.

Where our research does show a gender differential for overseas investing is in the investment vehicles used for overseas exposure.

Women are more likely than men to access international exposure through ETFs (55% vs 49%) instead of direct equities (36% vs 46%). In fact, the core benefits of ETFs – low cost, easy access to a diversified portfolio – resonate strongly with women irrespective of the fund’s underlying exposure.

On the ESG front, more than a third of Australian investors (36%) now say they have or will use ESG factors when selecting their investments. While men and women report this in equal proportions, women across every age group place greater emphasis on ethical, socially responsible and environmentally responsible factors (see chart 3).

But once again, women investors are almost twice as likely to feel they don’t know enough about responsible investing to get started (22% vs 12%).

Industry’s role in empowering female investors

Service providers and product manufacturers can help women align their investments to their values, goals and aspirations. But to do this they must deliver the products and tools to help start the investment journey as well as deepen the investing journey.

The theme of this year’s International Women’s Day is #EachforEqual, and financial equality remains central to this goal. It is crucial that the wealth management industry continues to empower women from all walks of life to take control of their financial wellbeing – young or old, wealthy or financially-challenged, self-reliant or requiring financial advice.

To make a positive difference, the entire wealth management ecosystem needs to focus on providing meaningful, engaging and networked self-education materials that help women start or deepen their investment journey.

 

Suzie Toohey is Global Head Client Service and Sales at Investment Trends.

 


 

Leave a Comment:

     

RELATED ARTICLES

Four ways to reduce the generation blame game

How to become a rich old lady

banner

Most viewed in recent weeks

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Latest Updates

Superannuation

The 'Contrast Principle' used by super fund test failures

Rather than compare results against APRA's benchmark, large super funds which failed the YFYS performance test are using another measure such as a CPI+ target, with more favourable results to show their members.

Property

RBA switched rate priority on house prices versus jobs

RBA Governor, Philip Lowe, says that surging house prices are not as important as full employment, but a previous Governor, Glenn Stevens, had other priorities, putting the "elevated level of house prices" first.

Investment strategies

Disruptive innovation and the Tesla valuation debate

Two prominent fund managers with strongly opposing views and techniques. Cathie Wood thinks Tesla is going to US$3,000, Rob Arnott says it's already a bubble at US$750. They debate valuing growth and disruption.

Shares

4 key materials for batteries and 9 companies that will benefit

Four key materials are required for battery production as we head towards 30X the number of electric cars. It opens exciting opportunities for Australian companies as the country aims to become a regional hub.

Shares

Why valuation multiples fail in an exponential world

Estimating the value of a company based on a multiple of earnings is a common investment analysis technique, but it is often useless. Multiples do a poor job of valuing the best growth businesses, like Microsoft.

Shares

Five value chains driving the ‘transition winners’

The ability to adapt to change makes a company more likely to sustain today’s profitability. There are five value chains plus a focus on cashflow and asset growth that the 'transition winners' are adopting.

Superannuation

Halving super drawdowns helps wealthy retirees most

At the start of COVID, the Government allowed early access to super, but in a strange twist, others were permitted to leave money in tax-advantaged super for another year. It helped the wealthy and should not be repeated.

Sponsors

Alliances

© 2021 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.