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Women better at Managing Money: Quantitave vs Behavioral paradigms

This is another take on the current issue of the better performance by women when it comes to managing money. It’s coming in the news lately that women are better at Money Management skills and even from a performance perspective, not only a decision-making perspective.

Opalesque.TV spoke with investment consultant Meredith Jones which is also author of the book  Women of The Street: Why Female Money Managers Generate Higher Returns (And How You Can Too). And she is of the view that women significantly performed better in alternative investments fund management, from a retail as well as an institutional perspective.

Meredith Jones is an alternative investment consultant and author of Women of The Street: Why Female Money Managers Generate Higher Returns (And How You Can Too).

Meredith Jones is an alternative investment consultant and author of Women of The Street: Why Female Money Managers Generate Higher Returns (And How You Can Too).

http://www.opalesque.tv/v.php?playerwidth=640&playerheight=360&videokey=6d1318afc5cdc33cad84c4912ddd0067

What explains the outperformance?

According to Meredith, biological factors such as hormones (specifically cortisol and testosterone) and brain structure can impact stress levels and risk taking.  In combination with cognitive components like probability weighting, matching expected outcomes with actual outcomes, and confidence levels, these biological and cognitive differences lead to identifiable behavioral patterns that can create higher returns. For example, women investors are generally more likely to trade less, sell into a market drawdown, or follow the investment herd.

In addition, she says that investors are beginning to look for a more diverse group of money managers and that there is a growing recognition of diversification and return generation benefits within women (and minority) run funds.

Mrs. Meredith Jones also contends and agrees that the best investment management teams were mixed in gender, with a mixed skill set and a diverse range of experiences. But what is important to note is her defense of the argument that the industries around Financial services and Investment or Money management are in need of paradigm shifts in the focus about management: from a Quantitative and Scientific-Technological, normally more male dominated paradigm to a more complex, inclusive, mixed and behavioral or cultural paradigm.

Photo: Meredith Jones is an internationally-recognized researcher, writer, speaker and expert in the alternative investment industry with over 15 years of experience.

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