Electronic trading is giving more women a chance at their stock picking skills

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Amidst all the recent turmoil in the stock markets, women investors have taken the long-term view on risk and rewards. (Image used for illustrative purposes.) Image Credit: AP

A trading floor has always been akin to a bull fight with multiple beasts charging at one another for the kill. An industry which was once reserved for the gentleman and the lad opened its doors to others via phone and electronic trading.

As per a study by Lu, Swan and Westerholm, women stock traders were more prone to buying when markets were falling, losing out in the short term, but resulting in significant gains in the longer-term, as they purchased when prices were low. This resulted in women returning as much as 43 per cent on individual stocks, and 21.4 per cent over a portfolio of 28 stocks. Men had more of a tendency to buy and sell assets quickly, and to trade in the opposite direction to women, resulting in overall losses.

The COVID-19 situation and the subsequent change in fortunes has been instrumental in more women pursuing stock investing, thus generating a league of their own. An Indian online trading platform Zerodha saw a 41 per cent jump in the number of clients to 3.1 million from 2.2 million in February. But the number of women clients on the platform went up by 59 per cent, and many of them with a higher risk appetite and staying invested.

A show of equanimity

Internal research by online wealth manager Nutmeg found that in the month leading up to March 15, men on the platform were 56 per cent more likely than women to reduce risk in their portfolios during the sell-off, and almost twice as likely to withdraw their money. Ninety-five per cent of women made no adjustments to their account.

Women are cautious and intuitive, and both attributes are important in the world of fund management. They bring in the much-needed calm and composure to a boiler room-like investment profession. A study by Forbes highlights top global female fund managers of 2020 who have given astronomical returns to their clients during COVID-19 by investing in genomics, fintech, electric vehicles manufacturing, solar energy and so forth.

How about a clan?

While there is significant difference between trading and investing, women are going beyond the dire need of financial independence to creating a clan where we can now imagine high networth women investors trading through women brokers and dealers and investing with women fund managers.

Though it may be worthwhile to glorify such success, as per a Deloitte survey, in 2019, the proportion of women in leadership roles within financial services firms was 21.9 per cent, which is projected to grow to 31 percent by 2030—still way below parity. Here, some may argue that women may not be interested in finance and left to fulfill bigger roles of caregiving.

But in days of extreme market volatility and uncertainty as we are experiencing now, it is beyond the shadow of a doubt that women can be put to a better use in grappling with investment and trading issues.