Female investors and the $1.87 trillion for social impact

More female investors could add $1.87 trillion to the investment pool towards social impact funds

Female investors desire social impact, and if they invested at the same rate as men, they would bring in $3.22 trillion of additional capital, including $1.87 trillion, to more responsible investments. Still, perception barriers and the low representation of women in the asset management workforce are holding them back.

These findings come from a report released today by BNY Mellon Investment Management that explores the barriers preventing higher female participation and the potential impact if more women did invest.

The barriers against female investors

Gender equity in investing is good for the finance industry and socially responsible business, but according to BNY’s first report in their ‘Pathway to Inclusive Investment’ series, three main barriers are stopping equal female participation in investing.

The first is income; women think they need $4,092 of disposable income each month – or $50,000 per year – before investing.

The second is the idea that investing is high-risk, with only 9% of female respondents reporting a “high” or “very high” level of risk tolerance when investing. In contrast, 49% have a moderate tolerance, and 42% have a low tolerance for risk.

The third barrier is low confidence about investing; only 28% of women said they feel confident about investing “some of their money.”

The pull-factor of social-impact funds

However, the report reveals how to encourage more women to make investments, and this is through having more purpose-driven and socially impactful investments available; 53% would invest – or invest more – if the investment “had a clear purpose for good.”

Aside from getting more women into the investment world, asset managers already have an existing pool of active female investors, with 71% of those under 30 who already invest preferring to invest in companies that support their values, compared with 53% of female investors who are over 50.

While millennials and Generation Z are known to be socially conscious, likely, their investment preferences are too, making them a great pool of investors for fund managers to engage.

Making the asset management workforce more inclusive

To encourage more women to participate in investments, it’s not only the types of funds offered that need consideration but the makeup of the investment workforce, too, as well as removing gender bias when targeting customers with products and services.

In this regard, the report also found that 86% of asset managers see their “default investment customer” as male, which they automatically target with their products, a practice that likely alienates potential female investors.

While 73% of asset managers believe the industry could engage more women if they had more female fund managers, half of the asset managers revealed that 10% or less of their fund managers or investment analysts are women. This suggests there’s as much work to be done within the investment industry to improve gender equity as there is when dealing with investors.

Hanneke Smits, Chief Executive Officer of BNY Mellon Investment Management, said: “Looking at the research, it’s clear that increasing women’s participation in investment is critical for their prosperity and to help shape a more equitable future for all. Doing so will also potentially help increase the allocation of capital for the benefit of society and the environment.

“Inclusive investment means ensuring the investment industry is accessible to all. BNY Mellon Investment Management is committed to doing our part to engage women more effectively. We will be using the insights from this research to ensure meaningful change takes place. By doing this, we also hope to promote the investment management industry as an attractive career option for women.”

Anne-Marie McConnon, Global Chief Client Experience Officer at BNY Mellon Investment Management, said: “As women, we all have different hurdles to overcome to meet our individual financial goals. Some of these are influenced by demographics and personal circumstances, but some result from how the investment industry has traditionally engaged with women.

“We believe it is in everyone’s interest for more women to invest. Not only will it be good for the future, but also wider society. Pathway to Inclusive Investment emphasises the traditional stereotype of the person who is interested in investing is outdated. Young women are interested in investing too, but they need to be inspired to do so.”

In this article, you learned that:

  • Equal female participation in investing could bring in $3.22 trillion of capital including $1.87 trillion for more responsible investments
  • Women are put off becoming investors due to ideas about investing being “high risk”
  • A majority of asset managers see their “default investment customer” as male, creating gender bias when targeting customers

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