US women are showing a greater interest in alternative investments than men, according to new research, challenging traditional stereotypes that female investors are risk averse.
According to research by US investment firm MainStay Investments, 60% of women surveyed expect alternatives to become a core part of their portfolio over the next five to 10 years.
By comparison, only 47% of men expect the likes of commodities, private equity, and hedge funds to become a “mainstream” part of their investment holdings over that same period.
The research, part of the report Investing Outside the Box, found women are investing in alternative assets to generate income, drive capital growth and achieve portfolio diversification.
Women that are invested in alternatives are allocating 27% to these assets, compared to the 20% that is being allocated by their male counterparts.
Anna Sofat, founder and managing director of UK-based wealth adviser Addidi, says she is not overly surprised by the findings.
“Historically, people might have said women are more risk averse, but they’re not, they just work with different pots of money, they’ll have quite low risk parts of their portfolio and quite high risk parts of their portfolio.”
Sofat established Addidi after perceiving a gap in the market for female investors, and she says the majority of its clients are female.
“My experience is that once you’ve got your core security catered for – your family and your children and perhaps your retirement – once that’s there, women are very happy to look outside of that and take high risks.”
Sofat says she thinks women are particularly interested in angel investing, social enterprise, art, and some of the “more physical alternatives”.
Emily Bouchard, managing partner of US-based wealth consulting and coaching business Wealth Legacy Group, says many investment advisers will focus on cultivating relationships with male investors, while paying less attention to those investors’ wives or female family members.
“This can garner an enduring feeling of distrust and lead women to choose to work with new investors who also have a "fresh", approach that may include alternative investment strategies as well,” Bouchard says.
According to research, 70% of women change their financial adviser when their husband dies.
Bouchard says alternatives may appeal to women because they may speak to them on “multiple levels of impact”, such as financially, socially, and emotionally.
“Many women want to have their investments not only make them excellent returns, but to also have a positive impact on the world - and many alternative investments allow them that opportunity,” she says.
The research found for all respondents, both female and male, that were invested in alternatives 48% had commodities, 39% private equity, 36% had long/short equity, 34% had hedge funds, and 30% had managed futures.
Investors currently using alternatives expected their exposure to increase 2.9% over the next five years.
The research surveyed more than 800 US residents aged 40 to 65 years old with at least $1 million of investable assets.