Female investors tend to be more risk averse than male investors are, according to a number of academic studies on investor habits. Evidence suggests that female investors hold less risky investment portfolios than their male counterparts do, and that in general, they tend to be less willing to take chances with their money. Data from the UBS/Gallup Index of Investor Optimism for the third quarter of 2003* suggest that female investors are indeed more bearish than male investors in their investment outlook.
Male Investors
Aggregated data from the UBS/Gallup Index of Investor Optimism indicate that on average, male investors were nearly three times as optimistic as female investors in the third quarter of 2003. While male investors registered an average of 82 on the overall Index of Investor Optimism during this period, female investors were at 27. In effect, these results tell us that male investors are far more bullish than female investors are in how they perceive the investment environment. Though positive economic indicators and corporate earnings growth suggest that a broad economic recovery is in place, female investors remain unconvinced.
The Case of the Affluent Female Investor
The Index, which defines "substantial" investors as those with more than $100,000 in investable assets and "average" investors as those with less than $100,000 in investable assets, shows that the substantial female investor has tended to be more cautious in her investment outlook than either average or substantial male investors have tended to be.
In examining differences in investment outlook as a function of investable assets, the data reveal that affluent female investors do not always have a more positive outlook than less affluent female investors do. The average Index score among substantial female investors was 55 in the third quarter, in comparison to 15 among average female investors during the same period. However, in prior quarters (such as the first quarter in 2003 and the fourth quarter in 2002), female investors were about equally optimistic regardless of the amount of investable assets they had.
It may seem intuitive that investors with higher liquid net-worth would be more bullish than those with less, but this has not always been the case among female investors. Substantial female investors had a more optimistic investment outlook than average female investors did in the third quarter of 2003, but their confidence plummeted late last year. In the fourth quarter of 2002 and the first quarter of 2003, the investment sentiment of substantial female investors was more bearish than any other group, including average female investors.
Bottom Line
Although substantial and average investors of both genders showed an upswing in investment outlook in the second quarter of 2003, less affluent investors seemed to moderate their optimism in the third. In the third quarter, the outlook of both female and male substantial investors improved, but there was a downtrend in the outlook of female and male average investors. Even as the markets seem to be rallying to a strong finish in 2003, less affluent investors, whether male or female, are also less optimistic about the overall investment climate.
*Results are based on telephone interviews with more than 1,000 investors nationwide, aged 18 and older, conducted monthly since January 2000. For results based on these total samples, one can say with 95% confidence that the margin of sampling error is ±3 percentage points.
