As we look ahead to International Women’s Day on Saturday, HMRC data shows that women hold 52% of all ISAs, but 1.9 million men took out a stocks and shares ISA in 2021/22, while only 1.41 million women did.
The Data from HL is to the end of December 2024, and separate data from HMRC: Commentary for Annual savings statistics: September 2024 – GOV.UK
Sharing her insight into these data, Sarah Coles, head of personal finance, Hargreaves Lansdown said:
“The gender ISA gap isn’t going anywhere fast. Men are still far more likely to hold stocks and shares ISAs than women – and they’ve made up a solid 61% of HL clients for the past three years. It means that despite women holding more ISAs overall, the fact that they’re focused on cash means men stand a better chance of growing their ISA pots over time, and women run the risk of running to stand still.
Overall, the HMRC figures show women are making a super-human effort to build their ISAs: they’re more likely to have one than men – in 2021/22, 52% of ISA holders were women. However, in the same year, men were still far more likely to pay into stock and shares isas – around half a million more men did so in one year alone. Women were much more likely to pay into cash ISAs instead. Given that stocks and shares have more growth potential than cash, there’s the risk that the gender ISA gap is only going to widen over time.
Reasons for the ISA gap
Women’s reluctance to invest owes a great deal to the fact that on average they earn less than men, and the more you earn, the more likely you are to have an investment ISA. Women tend to have less secure incomes, because they’re more likely to have breaks in their career for caring responsibilities or work part time and face a drop in income. It means some may feel they cannot face the risk involved with investment.
There’s no denying that there is risk involved, but the way we tend to assess long-term risk is faulty. We feel losses more keenly, so women can over-estimate the risk that investments will lose money over the long term. They may also underestimate the risk their cash ISA will lose value after inflation.
This helps to explain why the HL figures show that men were more likely to have paid a lump sum into their stocks and shares ISA than women over the previous 12 months
However, men are also more likely to set up regular investments, which is a brilliant way to build an investment pot. Women may feel they can’t afford to commit to the regular expense, but it’s worth knowing you can put aside as little as £25 a month, so it doesn’t need to be a major outlay. It may be that once more women know they can pay into investments little and often, it could help break down the gender ISA gap.
Even when you factor in the gender pay gap, it doesn’t explain everything, because when you look at the gender ISA gap between men and women, it is opening up by the time they reach the age of 19. At this point there’s little difference between the incomes of men and women, and the pay gap doesn’t ready bed in before the age of 40.It means more needs to be done to connect women with the potential of investment.
Women who invest
Women who invest are building impressive investment portfolios. Among HL ISA clients, women who have taken the plunge and invested in ISAs hold more on average in them than men. Women hold an average of £60,109 and men an average of £59,366 (figures exclude JISA and LISA).
Defying any thoughts that women and men have fundamentally different approaches to risk is the fact that many of the most popular investments are similar for both men and women, with large global index funds, US index funds and technology index funds, and popular managed funds like Lindsell Train Global Equity and Fundsmith Equity making the top ten.
Men are marginally more likely to hold more single company shares in their portfolio, and slightly more likely to hold overseas shares. However, for both men and women, funds make up the bulk of the portfolio.”
Investment Ideas
Victoria Hasler, head of fund research, Hargreaves Lansdown:
“For those who would like to take their first steps on the investing ladder, funds are a good place to start. Not only do funds offer a good level of diversification but they also allow the outsourcing of decisions to an expert. Here are ideas to get started:
Troy Trojan
Charlotte Yonge and Sebastian Lyon run this fund, which takes a total return approach, meaning that rather than trying to keep up with every sharp move up in the market, it aims to grow investors’ money steadily over time, while limiting losses when markets fall. The process looks to reduce volatility compared to the stock market – it is designed to smooth the bumps. It does this through investing in a mix of shares, bonds, gold and cash.
As a result, we think it could form the foundation of a broad investment portfolio, bring some stability to a more adventurous portfolio, or provide some long-term growth potential to a more conservative portfolio. It could also be a great first step out of cash for anyone wanting to start a stocks and shares ISA.
Schroder Managed Balanced
This is a ‘fund of funds’ run by Johanna Kyrklund, Remi Olu-Pitan and Nick Pearson, supported by a team of investors. Primarily invested in funds run by other talented Schroders fund managers, the investments collectively represent hundreds of different companies and bonds. This means the fund provides a high level of diversification in one convenient investment.
The managers tend to favour shares when the economic environment is positive. But in times of stress, they shift to more diversified assets, such as bonds and cash, aiming to minimise losses. Allowing the managers to allocate between bonds, cash and equities depending on their views could provide some peace of mind for those who want to get involved in investing but are less confident about making all the decisions themselves.
The fund has a holding in Hargreaves Lansdown.
Legal & General Future World ESG Tilted and Optimised Developed Index.
For investors who prefer to focus solely on equities, an index tracker fund is one of the simplest ways to start. Investing in companies across the globe provides a good level of diversification in a single fund. This one provides broad exposure to a range of large and medium-sized companies in developed markets, such as the US, Japan and Europe, while being mindful of environmental, social and governance (ESG) issues.
This fund aims to track the performance of the Solactive L&G ESG Developed Markets Index. It won’t invest in tobacco companies, pure coal producers, manufacturers of armaments or persistent violators of the UN Global Compact Principles.”
Fund performance
| 1 year | 3 years | 5 years | |
| Trojan X Accumulation | 9.12 | 11.46 | 28.82 |
| UK Retail Price Index | 3.62 | 23.29 | 34.79 |
| FTSE All-Share TR | 17.06 | 25.49 | 37.94 |
| Schroder Managed Balanced I Acc | 11.85 | 12.28 | 30.05 |
| IA Mixed Investment 40-85% Shares TR | 12.71 | 14.84 | 28.48 |
| L&G Fut Wld ESG Tilted and Opt Dvlp Idx Fd C Acc | 24.21 | 43.91 |
Source HL.
