By 2025, 60% of wealth in the UK will be in the hands of women*. That’s quite a statement and quite a responsibility.
According to Gillian Hepburn, head of intermediary solutions at Schroders, it is part of a cross-generational wealth transfer that will see some £1 trillion change hands over the next decade and £5.5 trillion over the next 30 years*.
Two thirds of this wealth is currently held by baby boomer joint households, so the first point of this transfer is likely to be from husband to wife.
The good news is the pandemic served as a catalyst for women to take more of an interest in their finances.
A survey of 2,129 British adults conducted in 2021 by female-focused think tank The WealthiHer Network found 51% of women have ‘taken more of an interest in their finances as a result of the coronavirus pandemic’. 40% of women also stated that saving for unexpected life events was one of their top financial priorities.
The bad news is that while 50% of landlords are now female, just 6% included investing in stocks and shares as an option and just 10% of women included making long term investments as a priority.
Why? Well there are a number of barriers. A global report conducted during the coronavirus pandemic, also commissioned by the WealthiHer Network, revealed that 72% of women in the UK feel they are not understood by the finance industry, which could be a contributing factor to them being less likely to invest. Other reasons include a lack of confidence and knowledge, being seen as more risk averse than men and having less money to invest in the first place.
But it’s this last reason, plus the fact that women live longer, earn less and are in social care longer than men, which means they need to be investing for a secure financial future.
And when you think that 80% of women will be solely responsible for their finances at some point in their lives*, it’s imperative that women engage more with their finances as early as possible. If you factor in the possibility of divorce, for example - 1 in 3 women aged 55-70 experience divorce and as a result have less than a quarter of the wealth of their ex-husband - the challenges are very real.
There are a number of things the industry and government can do to help. First is making investing look accessible. This can be achieved by using female case studies – women who already invest. Importantly though these women need to be seen as individual investors – not just appearing in a family photo.
Women also need to talk more. We’re happy to discuss and recommend a new restaurant, maths tutor or website – we need to be more comfortable discussing our finances. And this could start in schools. We need to education all young people about money and finances – the practical side of maths that is so sadly lacking today.
Because when women do invest they tend to do so successfully. A 2017 study of more than eight million investment accounts by Fidelity, revealed that women outperformed men by around 0.4% a year. Separate research by Warwick Business School in 2018 showed the gap to be even bigger, with women outperforming men by an average of 1.8% over a three-year period.
The global WealthiHer survey also revealed that 79% of women want to make investments that are environmentally responsible, and 89% want to make investments that are socially responsible. And here we really can help. Because today there are plenty of environmentally and socially responsible funds to choose from – some of which are managed by female professional investors.
This is a global equities fund that includes emerging markets. It has a unique approach of only investing in companies that are contributing to the decarbonisation of the world economy. Managers Deirdre Cooper and Graeme Baker believe the fund is set to benefit from the massive tailwind of the some $2.4 trillion of annual spend required to meet global temperature goals. As well as avoiding creating carbon emissions, companies in the fund will also have to have at least 50% of their revenues from three sectors: renewable energy; efficient use of resources, and electrification.
Run by Bryn Jones and Noelle Cazalis, this fund invests in quality investment grade bonds looking for a competitive income whilst generating attractive total returns. Ethical exclusions are simple: no mining, arms, gambling, pornography, animal testing, nuclear power, alcohol, or tobacco. This rules out about one third of the index. All positions must also have at least one positive environmental, social, or corporate governance quality.
This is a global equities fund investing in medium and small sized businesses whose products or services are making a positive impact on the world. The managers look for firms creating a positive impact and to identify these companies, the team has six impact ‘themes’: environmental protection, the green economy, healthcare, innovative technologies, nutrition, and well-being. In order to stay true to these themes, the team will also exclude companies that are causing harm, such as those involved in tobacco, weapons, and fossil fuels extraction.
As pioneers of responsible investing, EdenTree offers even the most discerning client a justifiable investment opportunity. Although it can invest in companies of any size, this fund is different from many of its peers as it invests in a number of smaller and medium-sized companies, as well as large-cap companies. The long-term track record of the fund’s performance over several decades has proven that ethical investing and good returns can go hand in hand.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Juliet's views are her own and do not constitute financial advice.