Who Runs the World?

For Illustration Purposes Only

Above are some of the common gender-stereotypical associations that are prevalent across popular media and culture. In a report published by Harvard Business Review in 2020¹, it highlighted research showing that women are more risk-averse than men “when it comes to picking stocks, investing in venture capital, or making acquisitions”. It should not come as a surprise that there is a difference in financial attitudes and behavior between both genders. Conventional wisdom may suggest that most men think of themselves as “breadwinners” while women embrace the role of “caregivers”. Aside from biological differences, there are also other demographic and social factors involved here.

The finance world is traditionally male-dominated, due to its perceived “masculine” culture. This goes back to the idea of “risk-taking” in “investing”, which is more commonly identified as a “masculine” trait. Indeed, UBS Women’s Wealth 2030 report highlights that there are long-established perceptions surrounding expectations on gender roles including caregiving and financial management². The report goes on to discuss the trends that will drive transformation going forward, with women’s wealth and power continuing to expand at the fastest rate ever. To that end, a report by Boston Consulting Group (BCG) points out that while women may be more averse to uncertainty – often due to a gap in information – they are inclined to make investment decisions using a fact-based approach, rather than relying on their gut feeling³. Therefore, once they are armed with the required information, their risk appetite could be in fact similar to that of men’s. Furthermore, they tend to outperform.

There has been plenty of progress made towards breaking through these archaic constructs and beliefs in recent years. The proliferation of financial literacy knowledge that is available to us today has no doubt played a role. The same report by BCG underscores that women now control a third of the world’s wealth. At the same time, women are contributing $5 trillion to the global wealth pool every year, with this figure outpacing global wealth market growth over the next few years³.

Figure 1: From 2019 to 2023, Women’s Wealth Should Grow by a CAGR of 7.2%

 

Source: BCG Global Wealth 2019 Market Sizing Database

Bringing this closer to home – data from Singapore-based robo-advisor Endowus illuminates two compelling observations⁴: First, women generally invest less often compared to men – this reaffirms what we have learnt above. Second – and more interestingly – women redeem less often compared to men even during volatile times. They concluded that in reality, women are more aware of the risks involved, but suffered the negative bias of being risk-adverse. This could potentially portend that women make better long-term investors than men. Again, this lends weight to what was discussed earlier.

 

Figure 2: Women redeem less often compared with men even during volatile times

Source: Endowus Research

 

Figure 3: Women generally invest less often compared with men

Source: Endowus Research

 

This is ever more so relevant to us today given how the 1st quarter of 2022 has shaped up, with some market participants calling this the “new investment regime”. Inflation is rising, interest rates are going up, growth is slowing, and returns are falling – to name a few. The highly unfortunate situation in Ukraine has also added heaps of uncertainty into the markets. As illustrated by the Chicago Board Options Exchange Volatility Index (VIX) chart below, we are now at levels of volatility not seen since the onslaught of COVID-19 in March 2020. The VIX Index signals the stress level in the stock market using S&P 500 Index as a proxy for the broad market. Going back to older data results in the same conclusion – an analysis of 60,000 users in Openfolio⁵, a consumer internet financial technology company, in 2014 revealed that portfolios held by female investors performed better than those of males during a market downturn.

Financial editor and writer LouAnn Loften, published a book titled “Warren Buffett Invests like a Girl” in 2011. Her research concluded that the Oracle of Omaha has a feminine bias to his investment style. This includes having a calm temperament coupled with a long-term outlook, and holding steady under pressure⁶.

Source: Bloomberg, 16 March 2022

Many studies have shown that to achieve your ideal weight, one has to have a plan to eat right and exercise well over a sustainably long period of time. Similarly, in order to reach your desired financial freedom, while one can focus on earning more money, you can reach your goals more quickly by focusing on saving more as well. As the old adage goes, there is no better time than now.

Well so, who runs the world?

¹Source: Harvard Business review, “How the Gender Balance of Investment Teams Shapes the Risks They Take”, 24 December 2020

²Source: UBS, “Women’s Wealth 2030: parity, power and purpose”, 8 March 2021

³Source: Boston Consulting Group, “Managing the Next Decade of Women’s Wealth”, 9 April 2020

⁴Source: Endowus, “Breaking the bias on female investors”, 1 March 2022

⁵Source: Kiplinger Consumer News Service, “7 Reasons why Women are Better Investors than Men”, 15 March 2016

⁶Source: Forbes, “Warren Buffet Invests like a Girl?”, 11 June 2011

 

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Comparing the TER cost for 20 years

Here’s the difference a low cost advantage makes to cost savings

Here's how much you pay

$190,272.13
Selected TER 1.00% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $90,359.56 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 2 years and 6 months.

Here's how much you pay

$271,950.61
Selected TER 1.50% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $172,038.04 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 4 years and 9 months.

Here's how much you pay

$345,744.19
Selected TER 2.00% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $ 245,831.62 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 6 years and 9 months.

TER (Total Expense Ratio) is the sum of various identified operating expenses charged on an ongoing basis to the fund’s assets as a percentage of the fund’s average net asset value calculated over a 12-month period at the close of the annual and semi-annual financial statements of the fund for all the p.a. tabs (1.0%, 1.5%, 2.0%).

The above scenarios are for illustration purpose only. Past performance, as well as any prediction, projection or forecast on the economy, securities market or the economic trends of the markets are not necessarily indicative of the future or likely performance of the funds. Calculations based purely on costs with no market movement or investment returns.