More High Net Worth Women Turn to Alternative Investments for Retirement Savings


NEW YORK (MainStreet) — A higher percentage of women than men are turning to alternative investments to generate income, drive capital growth and achieve portfolio diversification, according to a new report.

Read More: Does Your Portfolio Include Alternative Investments? Should It?

Alternative investments include asset classes other than stocks, bonds and cash, such as commodities, private equity, hedge funds and managed futures.

A MainStay Investments study called Investing Outside the Box found that 58% of women who invested in alternatives had a positive experience and 89% would recommend alternatives to their peers.

Read More: The Startup Gender Gap -- Men Get 6 Times More Funding Than Women

"Non-traditional investments may act as an equalizer that helps women get back on track to achieving their important long-term goals," said Matthew Leung, head of channel marketing strategies at MainStay Investments.

And getting back on track is important for women who've taken time off from work to care for children or aging parents.

"Women tend to be more conservative investors than men therefore it would stand to reason that they would seek out additional avenues through which they can diversify their portfolios away from traditional equity and fixed income investments and reduce portfolio volatility," said Rosemarie Moeller, financial advisor with AEPG Wealth Strategies in New Jersey.

Some 27% of high net worth women compared to 20% men are turning to alternative investments.

"Women live longer, spend more time retired, are more likely to take time off work to care of children or aging parents and also tend to make less money than their male counterparts," Leung told MainStreet. "With these important factors in mind, high net worth women in our study indicate that alternative investments may offer the best opportunity to diversify their portfolios and reach their objectives, such as retirement."

Commodities and private equity are two asset classes in which women are out investing men while men take the lead when it comes to investing in long/short equity, hedge funds and managed futures.

"There is a wide variety of alternative investments to choose from each possessing various objectives, risk profiles, costs and levels of liquidity and thus a foray into this asset class may be best accomplished through mutual funds which tend to be more cost effective and provide greater liquidity than privately managed counterparts," Moeller told MainStreet.

About 52% of women vs. 46% of men invest in commodities and 49% of women vs. 35% of men invest in private equity compared to 36% of men vs. 34% of women who invest in long/short equity, 34% of men vs. 33% of women who invest in hedge funds and 32% of men vs. 24% of women who invest in managed futures.

Risks associated with alternative investments include low correlation to stocks and bonds, difficulty determining the asset's market value, high cost, limited return data and illiquidity; however, despite the higher risk commonly associated with alternative investments, 55% of women said that over the past year they have increased their allocations to alternative investments and more than 27% say that within the next five years they plan to further add to their allocation.

"When considering making an investment in a non-traditional asset class, women in our study cited the degree of risk, ability to generate returns, and past performance as their top three considerations," Leung said.

In fact, 76% considered the degree of risk an investment has to offer, 72% mulled its ability to generate return potential and 70% explored past performance.

--Written by Juliette Fairley for MainStreet

Show Comments

Back to Top