Sex and the City: study shows that the female investor makes more profits than the male

Perhaps those men who simply handed over their pay packet to their partner got it right - women are still better than men when it comes to using their money wisely.

Perhaps those men who simply handed over their pay packet to their partner got it right - women are still better than men when it comes to using their money wisely.

New research confirms what many women used to balancing the domestic budget will have known all along: they are better investors than men and regularly play the stock market successfully, whatever the conditions. They are, in fact, the dominant sex when it comes to dealing with the City.

These are mostly not high-flying dealers or wealthy individuals with vast portfolios - but ordinary women, often in the shires and suburbs, playing the markets by telephone and on the internet and with relatively small sums. Yet these classic small investors are consistently beating the Square Mile's professionals at their own game.

According to a survey of 100,000 portfolios, involving more than half a million investments, carried out by the shares information website DigitalLook.com, women's portfolios have significantly outperformed men's portfolios and the London stock market.

Although they only represented 13 per cent of the total number of investors, the average woman's portfolio has managed to grow by more than 10 per cent in the year ending 31 July 2004. This compares to a 7 per cent rise in the value of UK shares as a whole - the FTSE Index - and a rise of just 6 per cent in the average value of men's portfolios surveyed. Andy Yates, director of DigitalLook. com, said: "Female investors have proved they can outthink and outperform men when it comes to share investing. When it comes to the dominant sex in the City, women have proved to be the consistent winner."

The company says its research shows that the success of women investors can be put down to building a balanced portfolio of different types of stocks, compared with men who still tend to put all their eggs in one basket.

At the same time, canny and cautious women have tended to invest in sensible retail and banking stocks, while bullish men continue to bet on more male-orientated technology and biotech stocks - a sort of "boy's shares" - which also tend to be riskier and more volatile.

The research also suggests women's share portfolios have managed to outperform men's portfolios when the market is both falling and rising. The average woman's portfolio managed to grow 2 per cent in the year to 31 October 2001, despite the downturn in the economy and the shock of 11 September. This compared to a 22 per cent fall in the value of United Kingdom shares as a whole, and a 26 per cent fall in the average value of men's portfolios surveyed. In other words, women appear to have read the market better both on the way down and on the way up.

Many women are choosing to play the markets through the growing number of small investment clubs - in which a group of individuals band together and contribute a fixed monthly sum which is invested in mutually agreed stocks. Around 12,000 clubs with a total of 100,000 members now exist. And, in contrast to individual investors, about half of the club members are women.

"Women seem to prefer to do it as a group,'' said Jayne Bowers, of DigitalLook.com. "These are ordinary women, often from the shires and suburbs, often 'ladies who lunch' and who like the social idea of it all and have a bit of fun investing some spare cash."

Typical of the new breed is Rose Townsend, 61, who runs a small bed and breakfast in the village of Llandogo in the Wye Valley as well as helping her husband run a garage.

A keen "carpetbagger" when building society flotations earned money for shareholders during the 1990s, she retained an interest in share prices and four years ago, taking advice from Pro-Share, the government body designed to stimulate the growth of small investors, she and a 15-strong group of female friends set up WWW (Wily Wye Women) Investors. Their male friends and partners were firmly excluded after expressing caution about the venture.

After an initial investment of £100 each, they now contribute a fixed £20 a month, which is invested in two or three different stocks agreed jointly, usually over a glass of wine at her home. Describing herself as a "dabbler", she said: "We are running are bit under at the moment, which I think is fair considering the state of the market, but we have made some very successful investments in high street names and building societies.''

It helped, she said, to have experience managing a family budget or running a small business. "I think that women are more cautious and tend to use common sense about investing rather than blindly following hot tips.

"Women also tend to be a bit more sentimental about buying local, well-known companies - and so have a lot more knowledge about the background and day-to-day business." Mrs Townsend cites the example of their decision to invest in the local racecourse at Chepstow. "We thought it would just be a bit of fun to go to meetings and swan around as shareholders in our big hats, but some of the men were a bit scornful because it was considered a bit of a boring investment. We had the last laugh when it was sold and we made a profit."

WHY WOMEN MAKE BETTER INVESTORS

1 Women prefer sensible stocks that always provide reliable, if modest, returns. Men prefer more volatile stock, such as the technology stocks.

2 Women create balanced portfolios spread across the market that will always give returns somewhere, as opposed to men, who tend to put all their eggs in one basket.

3 Woman tend to research their investments carefully, rather than blindly follow hot tips picked up in male bonding circles.

4 Women will often pick local companies, sometimes for sentimental reasons, but which will usually provide something in return.

5 Women, more used than men to balancing domestic budgets and the cut and thrust of supermarket pricing, understand better the economics of the wider marketplace.