Women less risky than men when investing
The CFA Institute the global membership association has found that when it comes to investing women are less risk tolerant than men.
The institute administers the Chartered Financial Analyst (CFA) and Certificate in Investment Performance Measurement (CIPM) curriculum and exam programs worldwide.
Women are more risk averse in their investments than men, which ultimately affects savings levels, according to a study published of the CFA Institute Financial Analysts Journal.
In a study John Watson, accounting and finance associate professor at The University of Western Australia and Mark McNaughton, a business analyst at Korda Mentha analyse how men and women differ in their retirement planning and behaviour.
The study titled “The Impact of Differences in Risk Aversion on Expected Retirement Benefits of Men and Women.”
In addition to finding that women are inclined to invest more conservatively than men, the authors conclude that women’s lower earnings levels will almost certainly lead to reduced expected retirement benefits.
The tendency of women to retire earlier and live longer than men, yet have similar annual retirement needs, compounds these differences.
The August FAJ also features two articles that relate to the surge of interest in alternative approaches to investing.
In “20 Myths about Enhanced Active 120-20 Strategies,” Bruce Jacobs and Kenneth Levy, CFA, both principals at Jacobs Levy Equity Management (Florham Park, NJ), dismiss common misconceptions about enhanced active equity strategies.
The authors address frequently heard comments on the impact of enhanced strategies on portfolio performance and the flexibility of 120-20 compared with long-only and market neutral long-short strategies approaches.
They explored operational issues, counterparty risk, and U.S. Federal Reserve Board Regulations T.
“Is Illiquidity a Risk Factor? A Critical Look at Commission Costs,” suggests that liquidity is an important risk factor for equities.
The information conveyed by a liquidity risk metric formed from aggregate commission rates on the New York Stock Exchange.
But the authors — Jinliang Li, CFA, associate professor of finance at Tsinghua University ; Robert Mooradian, associate professor of finance and Dunton research fellow at Northeastern University and Wei David Zhang, assistant professor of finance at Arizona State University have analysed liquidity’s role in the generation of stock returns.
They found liquidity to be significantly and positively related to the excess returns of the broad stock market, as well as having significant explanatory power for cross-sectional variation in stock returns.
The FAJ is published bi-monthly by CFA Institute, the non-profit professional association that administers the Chartered Financial Analyst® (CFA®) and Certificate in Investment Performance Measurement (CIPM).
CFA Institute
www.cfainstitute.org
Entry Filed under: SUPPLIER AND TECHNOFIN®, Risk Management
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