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

The creator of the 4% rule and his own retirement

The 4% withdrawal rate in retirement is an industry standard, a level where a retiree could be confident of not running out of money. Its creator Bill Bengen explains its use in this interview with Michael Kitces.

Welcome to Firstlinks Edition 383

One of the downsides of Donald Trump commanding the headlines is that we skim over other significant issues. For example, few Australians read the China Daily News or coverage of its contents, missing official statements that are terrifying hundreds of Australian producers. China says Australia will 'pay tremendously' for its recent lack of respect.

  • 12 November 2020

Seven items your estate plan may have left out

Most people pay cursory attention to estate planning, limited to a will and maybe a chat with the children. Those who want to make their intentions clearer and easier for others should check these quick tips.

Graeme Shaw on why investing is at a pivotal moment

Company profits have not improved for many years but higher valuations have been driven by falling rates and excess liquidity. Conditions do not suit a value and contrarian manager but here are some opportunities.

Alex Vynokur: ETFs deliver what’s written on the can

Exchange Traded Funds have moved well beyond indexes to a range of sectors, themes, smart beta and active. They are attracting strong flows from both experienced investors and newcomers.

11 key findings on retirement dreams during the pandemic

A mid-pandemic survey of over 1,000 people near or in retirement found three in four are not confident how long their money will last. Only 18% felt their money was safe during a strong economic downturn.

Latest Updates

Retirement

Five ways the Retirement Review points to new policies

The Retirement Income Review goes much further than an innocent-sounding 'fact base', and is sure to guide policies in the run up to the next election. It will change how we think about retirement incomes.

Property

Steve Bennett on investing in direct property for the long term

As people stayed home during the pandemic, a bearish view swept over most property sectors, but many have thrived and prices have recovered rapidly. The best opportunities are in long leases with quality tenants.

Retirement

Retirement Review gives strong views on hoarding of super

The Review includes some profound findings, most notable that retirement income should include drawing down far more capital. Expect post-retirement products to proliferate under a Retirement Income Covenant.

Superannuation

Paul Keating on why super relies on “not draining the bath”

Paul Keating is the champion of compulsory superannuation as the central means of funding retirement. In the wake of the Retirement Income Review, he is at his passionate best defending the system, with Leigh Sales.

Latest from Morningstar

Is your portfolio too heavy on technology stocks?

Investors with heavy allocations to a broad US index should check how much is exposed to tech stocks, especially when valuations look a bit steep. It might be time to reallocate to other sectors or styles.

Investment strategies

Beware of burning down the barn to bury the debt

At some point, policymakers will turn to the task of deleveraging, to work off massive debt burdens built up during the pandemic. Australia is already ticking the boxes on many policies used in the past.

Superannuation

New bankruptcy rules may have a domino impact on SMSF pensions

During COVID, bankruptcy rules have allowed small businesses to trade while insolvent. It may mean an SMSF is hit by the collapse of a business leaving trustees struggling to meet their own legal obligations.

Sponsors

Alliances

© 2020 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 class service prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, has been prepared by without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information. 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.