Are Women Better Stock Pickers?
In a male-dominated industry, female stock pickers are a rare breed. But when it comes to buying equities and surviving on little sleep, all while managing a family as well as a portfolio, women often come out ahead of their male peers.
Ana Armstrong, a mother of three and chief executive of Armstrong Investment Managers, believes companies should provide more flexibility to encourage working mothers in the finance industry.
“Women often re-evaluate their decisions, which is good for a stock picker. They are also more risk-averse than men and are superior in managing portfolio volatility. Women are also equipped with better intuition and are trained to survive on little sleep, multitask and organize their time, as they cannot afford to waste any,” Armstrong told CNBC.com.
“This helps with work-life balances, and companies should provide more flexibility to encourage working” mothers, she added.
This view is backed up by research published by DigitalLook.com in 2005 and 2008, which showed that female investors generally outperformed male investors, as they were less prone to underestimate risks.
Kathryn Langridge from Jupiter Asset Management recently launched and runs a global emerging markets fund. She started out in the 1980s and recalls that being a female investor back then was not all plain sailing.
Today women are legally granted maternity leave in many countries, but back when Langridge started out as an investor she found she had to use her holiday time to have her first child in September 1987.
She had her baby in September 1987, while working for Jardine Matheson Group. Based in Hong Kong at the time, she was the first female to be hired by the company on the trading side.
“There are a lot of extremely successful female fund managers and what is likely to mark out those women is that they have had to be more than usually determined throughout their lives,” Langridge told CNBC.com.
Like Armstrong, Langridge said she has faced many obstacles that made it harder to balance maintaining her career and meeting the demands of her family.
When describing key investing skills, Langridge believes women should not cut themselves off from instinctive judgment.
“I do place a high store on subjective elements,” she said. “The hair at the back of your neck does tell you a lot about companies — how they conduct themselves. Maybe that is a more feminine skill. I place a very high store on visiting company management.”
“A lot of one’s job is not identifying the best companies, but avoiding the badly managed companies, and a lot of what you pick up at a company meeting does depend on some of these softer skills. That enables you to minimize some of the pitfalls in investing,” Langridge said.
When it comes to taking risks, women are more careful.
“A very large part of my job is avoiding pitfalls and danger... estimating risks. I tend to run relatively diversified portfolios. One interpretation of risk is how you structure a portfolio to minimize risk. There are different approaches... some men may have a more concentrated portfolio with much larger stocks than I would be comfortable with,” adds Langridge.
Langridge does not believe it is possible to invest in a company simply by looking at the numbers.
“Actually understanding how management (thinks) and how they behave, observing their conduct over time that you can’t measure. These are more behavioral skills. Those skills are very important,” she said.
Thirty years later, there are very few women who are still engaged at a senior level, Langridge said. Both Armstrong and Langridge have witnessed a high fall-out rate among their peers because of the obstacles in their way.
Armstrong recalled: “I am aware of an institution that had five female portfolio managers at one point. Shortly afterwards, there were none. It would be nice to have more women on boards, more female fund managers.”