The Rise Of Women Investors

In her revolutionary 2017 book "Doughnut Economics", renegade economist Kate Raworth makes a simple but powerful case: economics must transcend academics and be reimagined to create a conscientious system that organises society. She affirms that, while the 20th century was dictated by men and their self-serving, ‘infinite growth’ mindset, the 21st century should learn from a more feminine, nurturing paradigm that can nudge the world into a safe, just- ‘sustainable growth’ orbit- embracing an inviolable balance between human and the planet.

This presents a radically advanced train of thought when juxtaposed with the reality of women in today's financial realms. The current numbers of women in financial markets are abysmally low; less than one in five demat accounts are held by women, and there’s no data on how many of these accounts are being managed by a male member of the family, robbing women of their essential autonomy.  The fact is the market fundamentally represents a broken system that discourages female participation. In a recent study conducted by Market Pulse Technologies, out of 200 women of diverse ages and demographics, 88 per cent were not willing to participate in markets due to fear, lack of knowledge, and even gender-shaming (many were laughed at or shut down by men for inquiring about markets and investing).

It was, however, encouraging to find that 71 per cent of them were willing to learn about markets if given the right guidance. Here’s where women who have achieved scale and success within the markets have an opportunity to help change the trend and level the playing field for women everywhere. The recent lockdown-induced surge of millennials in the stock market brings new hope that we could well be witnessing a slow albeit sure trend towards parity, thanks to young women especially. 

At such a pivotal time, it is useful to look at just how well women are poised to perform in capital markets.

Various studies by business institutes such as the Warwick Business School and financial institutions like Wells Fargo show that women are poised to outdo, and outlast, men in markets: they clock 1.8 per cent higher returns, invest 5 per cent more of their salary, hold trades 27 per cent longer, and are twice as willing to seek investment guidance. Research indicates that companies with more women in leadership show higher returns on capital, greater innovation, increased productivity, and higher employee retention and satisfaction. Naturally, since women are wired to choose patience and prudence over impulse and overconfidence range of reasons for women to venture into financial markets.

It’s no secret that women possess great motive— the freedom to earn without discrimination, to grow and manage one’s savings, and not having to rely on the males of the house for money matters. In special cases such as working students, single mothers, and those facing hostile social environments; the grounds to seek out additional sources of income are compelling.

As for the “opportunity”, we're living through a seminal moment in history. In a span of a few years, “invest like a girl” has gone from catchy hashtags to impassioned battle cry. Emerging digital platforms on investment guidance and financial literacy, are trying to build a community of financially empowered women. For the first time in history, the highest financial position in the US is held by a woman, while another woman entrepreneur has created Australia’s first ethical super-fund, by women, for women. There’s no dearth of reasons why women shouldn't storm the gates of capital markets, guns blazing. But the question is, what companies should women invest in?

The answer is simple. They shouldn't invest in a company, but a direction. With this single choice, women investors can make a world of difference. Global women’s leadership funds are urging women to “use the power sitting in their bank accounts to create the change they want to see in the world”. The strategy invests in ethical, diverse, socially aware and future-ready companies that value women’s leadership, advance gender equality, and are aligned with 'ESG' investing (consideration of environmental, social and governance factors alongside financial factors in making investment decisions). These companies are found to perform above par and deliver greater returns. By choosing to invest in such enterprises and initiatives, women can recalibrate the financial machinery, signal the rise of responsible investing as a practice, and shift the worldview from individual profit to holistic prosperity.

This is the kind of shift that Raworth envisions. With the emergence of confident, conscious women investors- we can go from a growing economy to a thriving civilisation, with women at the centre.

The author is CFO and Co-Founder of Market Pulse Technologies

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