Even in Investing, Women and Men Still Differ

Are women different from men when it comes to investing? Some experts think so. And they assert that because of these differences, mutual funds are a good investment vehicle for women.

First, a qualification: Many women are thoroughly adept at investing; some of the best fund managers are female. More to the point, several other traits play a bigger role in determining a person’s financial outlook and attitudes. “Age and risk tolerance are more critical than gender,” says Dr. Victoria Felton-Collins, a psychologist and fee-only financial planner with Keller & Coad Investment Counsel in Irvine.

Nevertheless, as a group, women do seem to approach investing a bit differently than men. Women tend to be less confident when it comes to financial products because they’ve had less experience in this area and haven’t dealt with as much money, Felton-Collins says.

A survey commissioned by Oppenheimer Funds of New York supports that assertion. In the poll, 71% of the female respondents between the ages of 35 and 54 said they don’t know how to invest, and 37% of the women in the same age group said they’ve never made an investment decision (see chart).


This lack of familiarity and confidence might explain the conservative bent that some people see in women. “I hate to say it, because it conforms to a stereotype, but women seem more risk-averse than men,” says Gail Eisenkraft, a vice president of marketing at Fidelity Investments in Boston. She points to a Fidelity survey of mutual fund owners showing that women gravitate to bond and money-market funds more than men do.

One factor that might impede risk-taking by women is the fear of destitution. “This is a fantasy of facing sudden, inexplicable poverty,” explains Felton-Collins, author of “Couples and Money,” a book dealing with financial matters. In a Ms. magazine survey last year, 28% of respondents said they worry that they will become homeless someday--and this from a readership that is overwhelmingly college-educated and reasonably affluent.

“All the women I worked with on a financial counseling basis, by the time they were 45 or older, expressed a fear of becoming a bag lady if they lived to old age,” says Betty Hart, a former financial planner and career counselor who now works for the Investment Company Institute, the mutual fund industry organization. This anxiety, she says, was shared nearly universally--by single as well as married individuals, homemakers along with career women.

Dr. Kathleen Gurney of Financial Psychology Corp., a Cincinnati consulting firm, has interviewed several thousand people of both sexes. From this research, she feels individuals can be classified into any of nine investor profiles. People in the group with the highest female representation (76% of the total) tend to be anxious, emotional, diffident and lacking in self-esteem when it comes to money.


“Hunters” is the label Gurney gives to individuals fitting this profile. “These people think they need a scout to lead them through the financial jungles of life,” she says. Even though “hunters” may be well educated and often earn good salaries, they don’t accumulate assets at a level that matches their income. Gurney attributes this to low confidence and, in the case of women, to a belief that they lack the same investment skills and abilities as men.

For women who share these traits, mutual funds represent a suitable investment vehicle, says Gurney, who discusses the nine profiles in her book, “Your Money Personality.” Because funds are diversified, they make sense for risk-averse individuals. “And the professional-management aspect appeals to people with a low level of financial involvement,” she adds.

Other mutual fund advantages include low minimum investments, an easy means of opening accounts and accessible information. Gurney points to one of her clients, a recently divorced Cincinnati woman who, despite a general lack of financial savvy, researched and compiled a list of top funds from information gleaned at a local library.

Despite this perceived female tendency toward risk aversion, it makes sense to diversify away from just bond funds, money-market funds or certificates of deposit. Palomba Weingarten, chief executive of Los Angeles-based Pilgrim Group, emphasizes the importance for everyone of including stock funds in a portfolio: “You must take some risk to have major rewards. Nobody’s going to retire on a money-market fund or CD.”

For people who nevertheless fret about stock market ups and downs, she recommends dollar cost averaging, a method of investing a set amount each month, regardless of the financial climate. She also suggests looking for investment consistency, such as in her own Pilgrim MagnaCap Fund (4.75% load; 213-551-0833), which didn’t have a down year from 1978 through 1989.

Felton-Collins suggests holdings in several asset groups. For a risk-averse female (or male) with $10,000 to invest, she recommends 40% in short-term bond funds, 30% in a money-market portfolio, 15% in a U.S. stock fund and 15% in an international equity portfolio. She favors the Janus Fund (no load; 800-525-3713) in the U.S. stock category, along with Vanguard World-International Growth and Vanguard Short-Term Bond (both no loads; 800-662-7447).

Felton-Collins also endorses the idea of dollar cost averaging. Find a fund company you like, place your cash into its money-market fund, then start moving assets gradually into the group’s stock or bond portfolios.

While women as a group might lag behind men in terms of investment experience and confidence, the gap appears to be closing. Eisenkraft cites a study conducted of financial decision making in affluent households by Payment Services Inc. of Tampa, Fla. In 1983, the survey showed, in 57% of these homes, men made the decisions alone, in 37% couples shared the decisions and in just 6% did women make the decisions. By 1990, the results had changed to: men alone, 38%; shared, 43%, women alone, 16%.


As women--and many men--become more comfortable with investing, an interest in mutual funds can’t be far behind.

THE GENDER GAP Other key findings of the nationwide survey on investor attitudes sponsored by Oppenheimer Funds:

* 71% of females between the ages of 35 and 54 said they don’t know how to invest, compared with 44% of the males.

* 37% of the women in the same age group said they’ve never made an investment decision, compared with 27% of the men.

* In general, women said they spend less time on investing than men.

* Only 9% of the women described themselves as ‘very confident’ when making an investment decision, compared with 13% of the men.

THE GENDER GAPA nationwide survey on investor attitudes, involving 1,000 respondents and sponsored by Oppenheimer Funds of New York, arrived at some findings that suggest there are sexual differences when it comes to money issues. Here are some results: