Would you feel more confident if your investments were managed by a man or a woman?
The money manager is a job that has traditionally seen men at the forefront, but it seems that women are more successful:
they achieve better performance over time and take lower risks.
That’s what comes out from Lou Ann Lofton’s best-seller entitled Warren Buffett Invests Like a Girl: And Why You Should, Too.
Here are some of the interesting points you will find in the book:
- Women take more time in making investment choices and take less risk;
- Women are more likely to seek out information that contradicts their beliefs or at least can challenge them, and change their minds. Men, on the other hand, tend to trust their thinking and are less inclined to change their management strategy;
- Men do more trading (i.e., they buy and sell securities with significant frequency), increasing transaction costs;
- Women are less sensitive to the pressure of results: this leads to a more balanced and patient approach, resulting in better performances with less risk.
In short, it seems that Warren Buffett, acknowledged as one of the most successful investors in the world, has embraced the investment strategies that have given women leadership in performance that most ignore.
Throughout the book, you will find numerous references supporting women’s records in investing.
If what Lou Ann Lofton claims is true,
why are money managers in great majority men?
To answer this question, I entered the keywords “women money managers finance” in a search engine; I obtained several results, which I summarise below:
- In financial organisations, women occupy management positions in less than 25% of cases and top management positions in less than 10%;
- only one out of five money manager positions are held by a woman;
- the representation of women in money manager positions is lower in countries with a long tradition in asset management, such as the US, the UK and Germany;
- mutual funds managed by women offer better yields.
The answer is simple: in finance, as in business,
the glass ceiling,
the invisible barrier that makes it difficult for women
to gain access to the key or interesting positions,
Why is all this happening?
At this point, two questions arise:
- What makes financial institutions’ shareholders give up the benefits of a greater presence of women?
- Is it reasonable to suppose that the defence of gender power prevails over the need to deliver better performance?
What do you think?