Research reveals high-net-worth women have larger portfolios, generate higher returns than men

Sydney, October 4 2023 – New research from FinClear, Australia’s leading independent technology and infrastructure provider for financial market access, has found that Australian High Net Worth (HNW) female investors have larger investment portfolios that achieve greater returns than their male counterparts.

With over half a million accounts on its platform, FinClear applied its in-house AI capabilities to analyse investment strategies of HNWs over the financial year 2022-2023. It also took a peek back at CY 2022 to see how the same investment strategies worked in more volatile markets.

Key findings included:

• The average portfolio size for HNW female investors was $1.08m, 8% larger than their male counterparts at $1.00m
• While in FY23 female and male HNW investors with diversified portfolio strategy achieved broadly consistent returns of 13.1% and 13.8% respectively, they did so in very different ways that suit different market conditions
• However, female HNW investors adopting high conviction strategies outperformed male investors by 7.5%, which for an average HNW portfolio equated to an upside of $75,000
• The most commonly held stocks amongst HNW investors adopting high conviction strategies were Saunders International, Fletcher Building, Charter Hall Long WALE REIT, TechnologyOne, and Praemium.

Male vs female investor behaviours

Although generally male and female HNW investors achieved similar returns for FY23, with similar risk vs return profiles, this outcome was achieved in very different ways.

Male HNW investors on average allocated more of their portfolios to more volatile growth sectors. They were also more active, hence (together with their adviser) tried to manage against the volatility. Whereas female investors allocated more of their portfolio to more stable sectors and diversified into more sectors, and hence can be less active in the market.

Examples of the primary differences between male and female HNW portfolios include:

1. Female investors have a 20% greater allocation to the Financials sector (banks) than men, whilst men have a 20% greater allocation to the materials sector (mining companies) than their female peers.
2. Men have almost double the allocation to tech stocks than women (e.g BLOCK, WiseTech, Xero, SEEK etc), although not significant amounts overall.

3. Women hold almost double the allocation to consumer staples, 5.5% of portfolio on average, vs 2.9% for men (Woollies, Coles, Endeavour wines, A2 Milk, Costa Group etc)
4. Men are more active traders, with 50% of men turning over 0.65 times their total portfolio in the year, whereas for females the equivalent metric is 0.45.
5. Women are slightly more likely to hold ETFs than men (11% vs 9.3%).

Commenting on these findings, David Ferrall, Founder and CEO of FinClear Group, said:

“With more women investing now than ever before, it’s notable to see how different investment strategies between women and men have generated broadly similar results. While female investors adopted a lower risk strategy, were more patient and had more confidence in core sectors such as financial services and consumer stables, their male counterparts adopted a riskier approach, ranging from sector allocation through to more active trading. Yet both groups generated broadly consistent returns.”

High conviction female investors outperform by 7.5%

Through FY23, female HNW investors who took a high conviction approach, investing with a higher risk adjusted return, benefitted with a 7.5% higher return than their male counterparts.

Factors that might have contributed to the variations between high conviction female and high conviction male investors included overtrading by the men – having a 44% higher rate of trading.

Female high conviction HNW investors, on the other hand, seem to have achieved this outperformance via careful stock selection and timing, often with support from advisers.

FinClear’s data also found that, unlike the wider population, female high conviction HNW investors also had larger portfolios, with a 33% greater average portfolio size – at an average size of $462,000, versus $336,000.

Commenting on these findings, David Ferrall said: “While women are often reported to achieve higher investment returns, many commentators assume they do so in part due to risk adverse behaviour. These findings show the opposite is true, with female investors who adopt the higher risk strategies outperforming their male peers in a range of volatile market conditions.

Market dependent

While female high conviction investors yielded enhanced results, through FY 22/23 success is always dependent on the market circumstances.

Interestingly if we adjust the timeframe to calendar year 2022 to include the greater market volatility from the invasion of Ukraine and the US tech stock correction, female HNW investors who took a high conviction approach outperformed male peers by an even greater 12.3%.