Globally, men’s allocation to alts is nearly double women’s: what are we missing? This was the big question I discussed with Tom Kennedy, Chairman of Kensington Capital Partners last spring!
For my 2024 Rich Thinking® research paper “What’s in your investment portfolio?” I interviewed 50 successful investors (25 women and 25 men) from various backgrounds and cultures around the world. I asked them about their approaches to investing and we discussed the current holdings in their portfolio. My biggest surprise was that men had nearly double the allocation to alternative assets, and so there is an alts gap!
Tom agreed that doing some research into this issue might spell opportunity. What are the top alternative assets and investment sectors that women want the most? Does this vary by geographic region? How can we attract more women into the alternative assets class? As a result of our conversation, I was commissioned by Kensington to conduct in-depth online interviews with over 50 diverse finance industry leaders around the world in July and August, 2024.
My key findings:
The #1 category of interest to women is private equity…but there is a challenge
In 2024, the top 10 alts that appeal to women are private equity, art, private credit/debt, gold, non-primary residence real estate, startups, angel investments, wine, collectibles, and infrastructure assets. But there is a challenge: although the #1 category of interest to women is private equity, there are multiple barriers for women trying to access these investments.
The ‘network effect’ is lacking for women to get into these deals: lots of deals come via social circles and you need to be invited in. Additionally, as private equity is considered to be opaque and a less liquid investment, women want to do way more due diligence on an opportunity before deciding to invest. They need access to better information!
Getting the right information which in turn leads to optimal asset allocation matters a lot! And the onus is on the investment industry to make this happen.
Caroline Miller, Independent Corporate Director in Montreal: “Women’s needs for greater explanations of alternative investments products is down to the industry’s shortcomings, not women’s inability to comprehend them.”
Health care, especially femtech, is top of mind for women investors around the world today
Research, diagnosis and treatment of diseases has historically and globally been centred around men, but we are now seeing a rapid expansion in technologies targeted at women’s health.
Alice Tang, Chief Operating Officer, MA Asset Management in Sydney: “Women know women’s needs, such as health and wellness. And women know best how to invest in these sectors.”
Blair DuQuesnay, Lead Advisor, Ritholtz Wealth Management in New Orleans: “Women tend to understand different industries than men. Invest in what you know. For example, women understand the healthcare system: they are the caregivers and advocates in their family for health. For years men made consumer products for women. There is a huge opportunity for all products to be made and marketed by women for women. Including alts!”
Anna Pearson, Co-Founder, Harriet in Singapore: “HealthTech and/or FemTech are massive areas of interest to women particularly as we age and understand the reality of the gaps in women’s healthcare alone. Take menopause for example, even First World economies still have no meaningful solutions for menopause, which is hardly a new phenomenon and yet I recently read that by 2027 the global FemTech market is expected to be valued at $60b+.”
From a liability to an asset: Defense investing is moving from sin to saint!
This was definitely my most surprising insight from this research. Perhaps due to geopolitical events, some women now consider including the defense sector as part of their overall investment strategy. Whereas the defense and military ‘brand’ used to be perceived as a negative one (lumped in with sin stocks like alcohol and tobacco stocks, or companies with reputational issues), defense is now deemed more worthy of consideration as a way to protect women’s families and countries.
Nora Laurinaityte, Green Finance Expert, INVEGA in Vilnius: “Defense is becoming investible due to technologies such as drone tech and radar tech and importantly these are no longer seen as macho investments. Defense tech will protect you and your family during an airstrike! This category of alts is seen as strengthening Lithuanian resilience.”
What can be done to attract more women investors to private equity?
Sylvester Andersen, Associate Vice President, European Markets, Nasdaq in Copenhagen: “Make it easy for investors to understand the dynamics of the private equity market and make information and investments easy to access. Narratives like “you own a small stake in a successful company” or “you can contribute to world change subject to the success of the company” can be highly effective.”
Francis Gosselin, Economist and Consultant in Montreal: “Private equity is of great interest to women for several reasons not the least of which is that as a private equity investor you have opportunities to influence how companies are performing by sitting on the Board or attending quarterly meetings. The women investors I talk to in Anges Quebec are very strong, powerful, and outspoken – there are now about 25 – 30% women in the club and our CEO (a former investment banker) is a woman. We pay $3,000 per year to see 50 deals and be part of a club that includes ultra high net worth investors so you can hear what they are doing.”
Diana Biggs, Partner, 1kx , Zug: “In terms of investor access, it’s exciting to see how the space is evolving and becoming more accessible, through the use of blockchain technology. Tokenization is a great tool to help women get into private equity– this solution is fully digitized and doesn’t distinguish between gender or smaller cheque sizes. If marketed effectively, this type of investment opportunity could be a great start for attracting a global base of potential female investors into private equity!”
Camilla Andersson, Professional Investor in Oslo: “If you want to attract women investors, understand that women need to know everything before we invest in anything! If you don’t explain the details around what is actually going on inside these unlisted companies women will not be interested.”
On that note, I recently came across a very well done two minute video ‘How it works’ produced by US-based Yieldstreet. Although the specifics are likely different in other countries, it is a useful high-level starting point for what might not be so obvious: how to buy alts.
For more ideas, read the full white paper “Women & Alts: A Global Perspective.”
This contribution to CVCA Central was written by Barbara Stewart, CFA, commissioned by Kensington Capital Partners.
