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How young Aussie women are overtaking male investors

While share ownership in Australia (and around the world) is dominated by men, there are encouraging signs that the wealth gap may close over time, as younger women start investing to build wealth. In a recent analysis by nabtrade, Gen Z women (the generation born between 1995 and 2015, following the Millennials) hold 20% larger portfolios than men of the same age.

Women's wealth traditionally held back

Demographic headwinds such as time out of the workforce to have children and lower average salaries have generally prevented women from accruing wealth at the same rate as men, resulting in a substantial wealth gap between the sexes in older generations.

In younger people, however, women are building portfolios through a combination of careful stock selection in large companies and much lower turnover rates than their male peers. This results in larger portfolios and lower transaction costs. In contrast, young men are more likely to hold stocks outside the S&P/ASX200 and to trade more frequently.

While women typically trade far less frequently than men across all age groups, they also trade in larger parcel sizes relative to their overall portfolio holdings. This aligns with global research since the 1990s, which suggests that men may be prone to overconfidence in their trading. Research shows men actively turn over their portfolios, which may reduce returns through excess transaction costs and imperfect market timing, while women place fewer trades and show greater commitment to their long-term investment strategies.

 

Stock selection

Individual shareholdings also differed between the genders across the generations, with women favouring staples such as Coles and Woolworths, as well as retailers including Harvey Norman. Women were also more likely to hold Bubs Australia and A2 Milk than their male counterparts.

nabtrade data showed women tend to stay with stocks and sectors that are familiar to them, meaning they are more likely to hold bank shares and less likely to invest in direct international shares than men across all age groups. While female investors showed a strong preference for ethical ETFs and were also much less likely to hold gambling and energy stocks than men, they were equally likely to hold one of the big miners.
 

Stock/Sector/Instrument Type

More likely to hold

Coles and Woolworths

Women

Retail sector

Women

Big Miners

Equal

Big Energy

Men

Gambling

Men

A2 Milk, Bubs Australia

Women

Domestic ETF

Women

International ETF

Men

Ethical ETF

Women


Differences between generations

While Gen Z women hold larger portfolios than their male counterparts, and Gen Y portfolios are of similar size between the sexes, female Baby Boomers hold just 56% of the portfolio size of men in the same age group. Gen X women hold portfolios nearly 78% the size of a man’s in the same age group.

These statistics paint a particularly dark picture of women’s economic wellbeing when couples commonly (and logically) choose to invest in the name of the lower-income earning spouse, typically the woman. Once accounting for this bias, the value of women’s overall holdings is further reduced.

The rise of online share trading and the proliferation of low-cost products such as ETFs has allowed young people of both genders to come to the share market at a younger age than previous generations, giving them a head start in wealth creation. As these investors grow in confidence and experience, it is hoped they will continue to invest for their future.
 

You can also access Gemma’s weekly Your Wealth podcast on nabtrade, or via Apple podcastsSpotify or Podbean.

About the author

Gemma Dale , nabtrade

Gemma Dale is Director of SMSF and Investor Behaviour at nabtrade. This information has been provided by WealthHub Securities Ltd ABN 83 089 718 249 AFSL No. 230704 (WealthHub Securities), a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances. All prices and analysis as at 13 November 2019.

Gemma Dale

nabtrade

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