Differential Investment Performance In South Africa Based On Gender

Abstract

Research has shown that, as a result of certain behavioural biases, individuals do not always make investment decisions in such a way as to maximise their expected utility. These biases have also been observed to manifest differently within gender: men are more overconfident, they display higher risk tolerances and they exhibit stronger self-efficacy and self-attribution biases. The trading behavior and resultant returns of 19,021 individual investors from a South African investment house were analysed over a five-year period (1 January 2007 – 31 December 2011).  The results showed a statistically significant negative correlation between trading frequency and investor return. While there is no statistically significant difference in the returns earned by men and women; men trade more and have higher variances of returns than women.  The data suggests that, on a risk-adjusted basis, women are better investors than men.