Vanguard: Women Trade Less, Accept More Assistance

Vanguard released the details of a new study where they looked at gender differences within defined contribution retirement plans (like a 401(k) plan).

One really fascinating insight is that women were much less likely to trade, but more likely to be diversified and to accept a managed product or service (like a target-date fund, for example). Men were more likely to override a managed solution in favor of their own and were significantly more likely to move things around.


VALLEY FORGE, PA (November 3, 2015)—Vanguard examined gender differences in participants of defined contribution (DC) plans…

Behaviors: Portfolio construction and trading

Additional gender tendencies emerged through an analysis of participants’ portfolio construction and investment decisions, though not necessarily on par with widespread financial stereotypes. Contrary to widely held views that women are more risk averse, their equity exposure is on par with that of their male counterparts. Instead, female participants skew towards less-concentrated risk. Women are less likely to hold employer stock and more likely to hold balanced investment allocations.

Nearly half of Vanguard female participants adopted professionally managed allocations—a managed account program, target date fund, or traditional balanced fund.  Women are also far more likely than men to hold a target-date fund. As of year-end 2014, 42% of women held a single target-date fund and, on average, held 52% of account balances in target-date funds. In aggregate, 17% more women than men held a single target-date fund in their retirement plan account.

Vanguard research has also consistently demonstrated that participants using professionally managed allocations have better portfolio outcomes than participants who construct portfolios on their own. Women also traded about one-third less frequently than men, with only 7% of female participants trading in 2014.

That’s pretty much what I would have expected prior to reading the results.

Despite the fact that men in the study earned more than women, in general, women’s increased savings rate made up for the disparity in balances that might have ensued. Women’s willingness to accept assistance, in the form of professionally managed investment programs was also key to this.


Vanguard Research

Full press release here

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