Unless the investment world becomes more inclusive, it stands to lose out on trillions of additional capital globally, BNY Mellon has warned.
In its 32-page report, The Pathway to Inclusive Investment, the asset management giant revealed that if the industry did more to overcome potential barriers to investment, and focused on communicating the clear purpose and positive impact, an additional $3.2tn (£2.36tn) of capital would be invested globally.
According to the report, if women were to invest at the same rate as men, this could have a significant and lasting effect on the investment industry worldwide.
The report surveyed 8,000 respondents across 16 markets, as well as 100 asset managers, with combined assets under management of nearly $60tn (£44.35tn).
It found that because women are less likely to invest than men, this compounds any existing, gender-based financial disadvantages as well as limiting women’s collective influence as investors.
But if women wanted to invest in a way that has a positive social and environmental impact, and that if women invested at the same rate as men there could be more than $3.22tn of additional capital to invest globally, with over $1.87tn flowing to more responsible investments.
There were three main barriers to this, the report found:
- The income hurdle: On average, globally women believe they need $4,092 (£3,026) of disposable income each month – or $50,000 (£36,900) a year – before investing some of their money.
- The perception that investing is inherently high-risk: Only 9 per cent of women report they have a ‘high’ or ‘very high’ level of risk tolerance when it comes to investing, while 49 per cent have a ‘moderate’ level and 42 per cent have ‘low’ tolerance for risk.
- The engagement crisis: Globally, just 28 per cent of women feel confident about investing some of their money. The industry needs to look at how to better engage and inspire more women to invest, which in turn could increase investment confidence and participation.
Hanneke Smits, chief executive of BNY Mellon Investment Management, said: “Looking at the research, it’s clear that increasing women’s participation in investment is critical for their personal prosperity and to help shape a more equitable future for all.
"Doing so will also potentially help increase the allocation of capital for the benefit of society and the environment."
According to Smits, inclusive investment means ensuring the investment industry is accessible to all, and pledged to ensure that BNY Mellon Investment Management itself would learn from the report and make sure that "meaningful change" takes place.
The research also found that women in particular want to see a positive impact on society and the environment, with awareness of and interest in environmental, social and governance style investing proving particularly high among women.
According to the report, 55 per cent of women would invest – or invest more – if the impact of their investment aligned with their personal values, and 53 per cent would invest – or invest more – if the fund they invested in had a clear purpose for good.
Younger women, in particular, had this view, with 71 per cent of those women investors aged 30 years old and under stating that they invest prefer to invest in companies that support their personal values.
Anne-Marie McConnon, global chief client experience officer at BNY Mellon Investment Management, said: “We believe it is in everyone’s interest for more women to invest. Not only will it be good for the future, but also wider society.
"Pathway to Inclusive Investment emphasises the traditional stereotype of the person who is interested in investing is outdated. Young women are interested in investing too, but they need to be inspired to do so.”