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The answer is that as far as we have come in gender equality terms, women still get paid far less than men in the same jobs, and more women are unemployed.
According to Statista, 29% of women in southern Africa are unemployed this year, compared with 25.7% of men. Projections for 2025 show little change, with estimates of 26% unemployment for men versus 29% for women.
Global and local studies show that women are the stronger sex when it comes to investing, outperforming men because they are less overconfident and don’t trade as excessively.
Paul Nixon, head of behavioural finance at Momentum Investments, has been studying investment behaviour in various contexts since the onset of the Covid-19 pandemic.
He has established a metric that tracks the value eroded from investment decisions. He calls it “behaviour tax”.
“We’ve also established machine learning techniques that study behavioural patterns and how these patterns impact the behaviour tax of the investor population,” he says.
Nixon carried out a study looking at the behaviour and resulting investment return impact of investors in unit trusts – the Momentum Flexible Investment Option – from 2020 until the end of 2023. A few key observations emerged:
The switch itch: The average number of switches (disinvesting from one unit trust and investing in another) by males is two per year. Women switch 5% less than their male counterparts. A 2023 Fidelity report showed that 51% of women who invest in the stock market said they wait it out and stay the course during times of market volatility, compared with 43% of men.
Overconfidence: The trend of chasing past performance when markets show signs of recovery is still very prominent. Here the overconfidence of males is equally prominent. Nixon measured the overall extent to which men and women up-risk and de-risk their portfolios by tracking their asset allocation over time. This is the mix of stocks, property, bonds and cash that they hold in their portfolios. “When men hit the accelerator during market performance, they hit it much harder. Their portfolios contain more risky asset classes during these periods than women. This is confirmed by a larger portion of males in the ‘assertive’ investor archetype who consistently up-risk their portfolio,” he says. Assertive investors tend, on average, to switch larger amounts, and this archetype had the highest average rand value lost per investor.
Behaviour tax: Since the onset of Covid, behaviour tax has plagued South African investors. In a nutshell, behaviour tax refers to the rands and cents you lose when you make financial decisions based on emotions such as fear and loss aversion, or overconfidence, rather than the bare facts. Since Covid, men have experienced an average behaviour tax of a staggering 4% per year. For women, however, it was 20% lower than men.
When looking at both switchers and people who stayed invested, Momentum found that women tend to outperform their male counterparts by nearly 30 basis points or 0.3%.
As far back as 2001, behavioural finance research duo Barber and Odean reported that women’s investments performed better. Not only that, but men showed better investment performance in the mere presence of women, whereas the portfolios of single men underperformed significantly more.
Just last year (2023), Forbes reported that women hedge fund managers have the edge over their male counterparts. This was again attributed to men being more overconfident and trading excessively.
Hanneke Smits, CEO of BNY Mellon Investment Management, said: “Looking at the research, it’s clear that increasing women’s participation in investment is critical for their personal prosperity. Doing so will also potentially help increase the allocation of capital for the benefit of society and the environment.”
Reasons for investment gap
In a nutshell, women invest less because they have less and they are told men are better at it.
Robo-adviser investment platform Ellevest says there are three reasons the investment gap exists: The financial sector was created by men and for men; women do not have as much extra money to invest as men do; and society conditions women to believe they’re not good with money.
UK-based investment research house Boring Money found the gender investment gap rose by £54-billion to £567-billion between January 2023 and January 2024. Men had £1.01-trillion invested versus £450-billion for women. The figures included personal investments but excluded workplace pensions.
“The gender investment gap remains stubbornly and frustratingly high and has got worse in 2024,” said Holly Mackay, Boring Money’s chief executive.
And the figures are, depressingly, worse in South Africa. The 10X Retirement Reality Report released earlier this year shows that one of the primary reasons women have less retirement savings than men is because of lower lifetime earnings.
The gender pay gap
Gender parity ratios in monthly income earnings are skewed towards men: for every 10 male workers earning above R11,500 a month, there are six women in the same income bracket.
“Laws forbidding discrimination against women in the workplace may slowly be narrowing the career opportunity and pay gaps between the sexes, but there is still a long way to go.
“Pregnancy and child rearing set a woman’s career back even further financially, especially when it comes to retirement.
“Women often have to [bear] the brunt of the caregiving costs, especially for single mothers in South Africa.
“To top it all, women can expect to live five years longer, on average, than men,” says Caroline Naylor-Renn, chief operating officer of 10X.
Almost half (49%) of all women respondents in the 10X Retirement Reality Report indicated that they do not have a retirement plan, compared with 43% of men.
Read more: After the Bell: SA’s new pay gap disclosure requirements do not go far enough
The report also found that, although more women (30%) were savers compared with men (26%), there were fewer women investors (14%) than men (24%).
The problem with this picture is that returns on savings in the bank rarely match the inflation rate, let alone beat it.
“Only investments in growth assets, such as listed shares (equities), can deliver inflation-beating growth over the long term. It’s important to strike a balance between saving for short-term goals and investing for long-term goals,” says Naylor-Renn.
Worryingly, only 15% of men and 11% of women recognised the distinction between saving and investing, pointing to a deficiency in financial literacy. DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.
