Women lead in the share stakes

GENTLEMEN prefer bonds, the great US banker Andrew Mellon once said. For all the advances made by women in recent decades, high finance remains a male-dominated preserve.

Equality might be the defining theme of our age, yet Britain's boardrooms and the City of London are still dominated by men.

Just eight of the UK companies quoted on the stock market are led by women, while 90% of fund managers are men.

But it is not just tradition that lies behind this continuing male domination. It is also the belief that men are somehow innately better with money, that their natural self-confidence makes them more effective investors. Many women, by contrast, supposedly have little grasp of economics and are fearful of the complexities of finance.

As someone who has enjoyed a successful, 20-year career in fund management, I have always regarded such thinking as a lot of nonsense, based on nothing more than prejudice.

Financial fallacy

AND now, new research has exposed the fallacy of this belief. According to a new study by the financial information website DigitalLook.com, women who play the stock market actually outperform men.

Its analysis, based on a survey of 100,000 portfolios, shows that ordinary women investors, living all over the country and dealing in shares by the internet, telephone or investment clubs, are consistently doing better than the well-salaried professionals of the City.

It goes to show that there's no better way to learn about finance than managing your own household.

The average woman's portfolio rose by 10% last year, compared to a rise of just 7% for the overall FTSE index and a 6% increase for that of the average man.

Even in the very bad times, women tend to be more shrewd about shares. In the year to the end of October 2001, there was a dramatic decline of 22% in the value of UK shares, yet according to DigitalLook's figures, the average woman's portfolio grew by 2%.

These statistics overturn all the received wisdom about women's supposed difficulties with the stock market.

It seems that if there was true gender equality in the Square Mile, the City might be flourishing to a far greater extent than it is today.

We have been so caught up with the macho imagery of dealmaking in the City that we have tended to ignore the contribution which could be made by more cautious, less ego-driven women.

It could be argued that investing in shares is a form of gambling. If so, then women tend to be much more cautious than men. We will go for the favourite in the hope of a decent return, but the male gambler will go for the outsider in the hope of making a killing.

This innate caution probably stems from our traditional role as nurturers, looking after the family and the household finances.

Balanced budgets

THERE'S no doubt that my own experience in raising a family of young children gave me a special insight into organising money - something that my male contemporaries, focused remorselessly on their own careers, lacked.

Not only do we women have a good natural grasp of balancing budgets, we also tend to think in the longer term about money.

Oscar Wilde, who was famously spendthrift, said that 'anyone who lives within their means suffers from a lack of imagination'. Looking after young children, women have never been able to take such an insouciant attitude towards finance.

I think that a key part of female success with money lies in our natural intuition. Generally we tend to be shrewder judges of character, enjoy more common sense, and can read a situation more clearly and instinctively than men. These are important qualities for making a success of share dealing.

As a fund manager, for instance, I often meet the managers of companies to discuss whether to invest in their schemes for expansion. I stare into the eyes of the directors and ask myself: 'Do I believe the story you're telling me? Is this plan realistic or just empty hype?'

My intuition, working on a level beyond the polished prospectus, will usually give me the right answer.

My intuition certainly helped me avoid two of the recent investment disasters of modern times.

The first arose during the internet explosion of the late Nineties, which was supposed to have overthrown all the old rules about economics.

Internet bubble

MY gut instinct told me the internet boom was nothing more than a bubble, because the projections of huge profits were not based on any substance.

Yet all too many male investors were caught up in the excitement, believing that fortunes could be made overnight.

For a while, during a time of wild talk by paper millionaires, I feared that I might have missed out. When the bubble burst, however, my intuition was proved right.

The second occasion occurred when the Japanese stock market briefly became the largest in the world, even outstripping that of the US. Once again, I was doubtful.

After all, I reasoned, the US was a country of more than 250m people, while Japan had a population half the size, so there was far less scope for consumer expansion.

I further reckoned that Japan was a far less dynamic economy than America, the home of free enterprise; the US creates, whereas Japan only replicates.

And I also sensed that China, with its far lower labour costs, would soon be an economic rival to Japan in the Far East.

So I sold all my Japanese stocks, just before the country sank into a recession from which it has still to recover.

My approach is probably typical of the female investor. We tend to be more realistic, less credulous than men. We look on the darker side of proposals before leaping in. We often show more patience, recognising that money takes time to grow.

Channel-hopper

BUT men find it hard to sit and wait, so many male investors end up constantly buying and selling different shares to try to make a bigger or quicker profit.

The male investor is like a TV channel-hopper with the remote control in his hand, constantly switching between channels in the hope of chancing upon something better - whereas a woman will find a programme she likes and stick with it.

Men are also more drawn to extremes than women. On the roads they are often faster, more dangerous, less reliable drivers than women, preferring the Ferrari to the Ford Focus.

The same is true of investments, where they tend to be more cavalier, seeking out risky new stock rather than plodding along with solid performers.

I have employed many fund managers, male and female, and I can honestly say that I have never worked with a reckless woman - but there have been a few reckless men.

Indeed, the notorious trader Nick Leeson from Barings Bank could almost serve as a symbol of the worst of masculine impetuosity in the City.

And it is telling that, according to the latest research, the average personal debt for women is £12,617, while the sum for men is almost double that.

When it comes to matters of money, women are the tortoises and men are the hares. And we all remember who won the race in the end, don't we?