{"id":861860,"date":"2026-03-31T05:01:26","date_gmt":"2026-03-31T05:01:26","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/861860\/"},"modified":"2026-03-31T05:01:26","modified_gmt":"2026-03-31T05:01:26","slug":"why-women-make-better-asset-managers-but-worse-traders","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/861860\/","title":{"rendered":"Why women make better asset managers, but worse traders"},"content":{"rendered":"

Much has been said about the experience of women in banking<\/a>, but for all the targets and goals and deadlines in the world, there\u2019s not a lot of literature suggesting that the pursuit of parity across finance might, in fact, be misguided.\u00a0<\/p>\n

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A recent research paper from\u00a0Rosy Cilia and Florian Meier of Heriot Watt University, however, suggested something else. Cilia & Meier found that, even among trained and active trading professionals, male professionals in trading roles were much more prone to overconfidence in their abilities than female ones.<\/p>\n

Although this was not a new finding, it was the first specifically researching financial services professionals, rather than retail investors. The researchers noted that masculinity and overconfidence had a well-established relationship.<\/p>\n

A healthy risk appetite is strongly associated with higher returns when trading – Goldman Sachs, which has a higher risk appetite than Citi<\/a>, posted more >$100m profit trading days (81 in total versus Citi’s 72), despite having access to less total capital to finance trading activity.<\/p>\n

There was also a well -established relationship between women and having a herd mentality. The desire for loss aversion was gender neutral. Interestingly, however, the herding tendency of women was tied to experience. Cilia & Meier found that, as a woman gained more experience in her role, she would be less subject to this herding instinct.\u00a0<\/p>\n

The male tendency to overconfidence isn\u2019t just about placing big bets. It\u2019s been known for more 25 years that \u201cmale investors tend to overestimate their financial literacy,\u201d which led to \u201cheightened levels of trading\u201d, and, in turn, \u201creduced returns.\u201d<\/p>\n

\u201cOne potential explanation for these differences has been attributed to psychological and cognitive differences across genders, such as a difference in risk perceptions,\u201d one research paper in 2014 by Hassan et al..<\/p>\n

The researchers noted that the \u201cpersistence of biases\u201d in the industry meant that employers ought to take steps to \u201cmitigate\u201d the interference of these tendencies with portfolio management. \u201cFirms should adjust their risk management strategies, focusing on the composition of diverse decision-making teams, to mitigate the influence of cognitive biases.”<\/p>\n

Presumably, the implication is that hedge fund and trading roles (which traditionally have larger risk appetites) ought to have a higher proportion of men, while asset management roles (with smaller risk appetites) ought to be more female.\u00a0<\/p>\n

The research has spoken.<\/p>\n

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