If women invested at the same rate as men, there would be at least an extra $3.22trn of AUM from private individuals today, according to the report.
BNY Mellon IM’s research also reveals that increasing women’s investment is apparently critical not only for their personal prosperity but also for society and the planet. “Women are more likely to invest for social and climate impact, and choose investments based on their individual values,” the authors concluded.
More than half of women would invest – or invest more – if the impact of the investment aligned with their personal values or if the fund had a clear purpose for good, according to the findings. This trend is even more pronounced among younger generations: 71% of women under 30, for example, who already invest, prefer to invest in companies that support their values, compared with 53% of women over 50.
“Greater female participation in investment – to the same level as male participation – could, therefore, see an additional $1.87trn channelled into responsible investment or investments that have a wider impact on society and the world, as well as potentially providing returns,” Hanneke Smits, chief executive of BNY Mellon IM, said.
The study included 8,000 women and men across 16 markets – comprising consumers who already invest as part of their future financial planning and those who currently do not invest. It also interviewed 100 global asset managers, representing 100 asset management firms with $59.6trn in combined AUM.
In Asia, India is the region where investment confidence levels among women are the highest. Data shows that on average they already invest at the same rate as men.
But within Asia, the proportion of women who feel confident about investing varies significantly, from 15% in Japan and 26% in Hong Kong to 47% in India, suggesting that emerging markets with younger populations have higher levels of confidence. Globally just 28% of women feel confident about investing some of their money.
On the other hand, women in Hong Kong and Singapore believe they need almost $6,000 in disposable income per month before they can invest. This is higher than their Asian peers and significantly above the global average of $4,000.
Women in China, Japan and India believe they need a smaller amount of disposable income each month, ranging from almost $2,500 in China and Japan to $547 in India.
Yet women in India are also the most risk-adverse, with 52% saying that investing in the stock market is too risky for them. On the other hand, women in Japan have the highest level of risk tolerance, with only 36% saying that investing money in the stock market is too risky for them.
Women in Asia are looking for more than just financial return on their investments – women in China and India ranked the highest in the region (75% and 72%, respectively) in terms of willingness to invest (or invest more) if the impact of their investments aligned with their personal values. This is higher than the 55% average globally.
What’s holding back women investors?
According to the report, women’s participation generally in investment is held back by three impediments: the engagement (with investment services and channels) crisis; the income hurdle (the perceived income required to start investing); and the perception that investing is inherently high-risk.
“We realised that women are not uninterested in investing, but many are under-confident as a direct result of the fact that the investment world is not reaching women as effectively as it could,” Smits said.
However, the data suggests that a shift is already taking place, with younger women more engaged with investing: 60% of women aged 18 to 30, for example, are open to investing or have invested in the past, compared with just 45% of women over 50. “Change is happening, but not quickly enough,” said Smits.
While the gender-investment gap is a known phenomenon, suggested solutions have typically focused on educating women. “It is not simply women who need to act but that the industry itself also needs to evolve, in order to encourage greater levels of female participation in investment,” she said.
Currently, almost nine in 10 asset managers (86%) say that their default customer – the person they automatically target when developing and communicating products – is a man. As a result, almost three-quarters (73%) of asset managers admit that their organisation’s products are primarily aimed at men, thereby creating a disconnect in how the industry approaches women, their values, and what motivates them to invest.