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Why your next fund manager should be a woman

When you think of who you want managing your money, you probably picture an elderly fellow who looks like he’s got experience, whose grown wise with age, whose seen the ups and downs of the market and learned the lessons he can pass on to you and your portfolio. Well, that’s exactly wrong.

I’m not saying a man can’t manage your money. But data shows that what you should be doing is giving your money to a woman. Shocking, I know. But there are many reasons your next money manager should be female.

From left to right, Indonesian television journalist Rosianna Silalahi, Managing Director of International Monetary Fund (IMF) Christine Lagarde, Indonesia’s Finance Minister Sri Mulyani, Executive Secretary of the United Nations Economic Commission for Africa Vera Songwe, Executive Director of the International Women’s Rights Action Watch, Asia Pacific, Priyanthi Fernando, and Senior Deputy Governor, Bank of Canada Carolyn Wilkins talk during Empowering Women in the Workplace seminar panelists at International Monetary Fund-World Bank meeting in Bali, Indonesia Tuesday, Oct. 9, 2018. (AP Photo/Firdia Lisnawati)

First, the numbers show that as money managers go men don’t perform any better. Recent Morningstar data found that men slightly outperform women and mixed gender teams in equities but women slightly bested men in bonds. But over a long-term time horizon women tend to take less risk, meaning their losses are typically lower – which is nice since it’s your money, not theirs, that they’re losing.

A survey last year from Fidelity Investments found that women investors save more than men and their investments earn more annually. It’s a small difference – about 0.4 percent – but for a 22-year-old starting out with a salary of $50,000 a year, investing with the average woman instead of the average man will mean an extra $250,000 at retirement.

But let’s say it’s more important that you invest your money in funds that are geared toward the future engines of growth rather than the past. Well, women are leading there too.

ESG, green investing, emerging markets, socially responsible, thematic investing and a host of other niche funds that are outpacing traditional stock and bond indexes are increasingly being managed by women.

Men are mostly running the old boys club stock and bond funds, focusing on U.S. equities and fixed income. Yawn.

This is a big reason why since 2015 as most investors are moving into cheaper index funds, robo-advising and dirt cheap exchange-traded funds or ETFs, the number of male fund managers has sunk while the number of female fund managers has held strong.

Women currently control 51 percent, or $14 trillion, of personal wealth in the U.S. and are expected to control $22 trillion by 2020 – according to a report from BMO Capital Markets. Globally, the Boston Consulting Group found women control more than $40 trillion of wealth and that number is expected to jump to $72 trillion by 2020.

With more women making money management decisions it should mean more money moving towards women money managers. And the numbers show that’s a good thing.

Dion Rabouin is a global markets reporter for Yahoo Finance. Follow him on Twitter: @DionRabouin.

See also:

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