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It's Not Shopping, It's Market Research: Talking Investing Trends With TD Ameritrade's Nicole Sherrod

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It's Not Shopping, It's Market Research: Talking Investing Trends With TD Ameritrade's Nicole Sherrod

Benzinga recently had a chance to follow up with the managing director of the trader group at TD Ameritrade Holding Corp. (NYSE: AMTD), Nicole Sherrod, on a study published earlier this year on women and investing trends.

The study illustrated that new trends have begun emerging pointing toward women having "better" investing strategies than their male counterparts.

Check out part one of this coverage here.

Benzinga: Is there an apparent difference between what types of stocks women invest in as compared to men?

Nicole Sherrod: Not as much of a difference as you might think. Looking at TD Ameritrade clients, women's equity portfolios are distributed very similarly to men's. JNJ is the only stock that shows up in women's top 10 stocks held that is not in men's top 10; F is the only stock in men's top 10 that is not in women's top 10.

Additionally, when women start trading, their first stock trade is generally AAPL, though GE, BAC, MSFT, CSCO, F, INTC, ALU, T and PFE are in the top 10 most popular stocks to trade first.

For men, their first stock trade is also generally AAPL, with GE, F, BAC, MSFT, CSCO, INTC, ALU, GOOGL and T rounding out their top 10 most popular stocks to trade first.

BZ: Is there an apparent difference between HOW women invest as compared to men? Do women hold more in lower risk stocks/less in higher risk stocks or any other trends that demonstrate gender-specific strategies? In other words, while women might appear to invest more in the _____ sector, is there evidence that the investing strategies extend beyond sector/company interest -- is there evidence that the strategies are more statistically/technically/fundamentally meeting particular criteria? (What appears to be more important/weigh more heavily into how women invest: company profile or the stats/technicals?)

NS: Of the 10 major sectors, both women's and men's portfolios are concentrated in the same sectors, in the same order, for seven of the 10 categories. The percent distributions are very similar, though women hold less percent of their portfolios in information technology, financials, energy, consumer discretionary and industrials.

Women hold a greater percent of their portfolios in healthcare, consumer staples, utilities and telecom. In other words, women have a higher concentration in sectors that are health and household related than men do, which is what I would expect to see. The biggest difference is seen in consumer staples, where women hold 1.5ppts more in the sector than men.

BZ: Are women truly "under-invested?" What does that mean?

NS: Women tend to be more conservative savers and keep more of their money in cash, which can result in slower growth. It's hard for us to look at our database to make the case whether or not women are under-invested. You have to know a great deal about a person's financial situation to evaluate whether they are appropriately invested. What we can share is that only 29 percent of our account holders are women. We'd like to see that number closer to parity to feel confident that women are doing everything in their power to save for retirement.

BZ: What does the typical woman's portfolio look like?

NS: Women hold 24.2 percent of their equities in information technology, versus 25.0 percent for men (-0.8 ppts).

  • Not surprisingly, AAPL is the top held IT stock for both genders. Surprisingly, MSFT is the #2 IT stock held by women and FB is the #2 IT stock held by men. Both stocks rank #4 for the other gender, and both genders hold INTC as their #3.

Women hold 15.1 percent of their equities in financials, versus 15.4 percent for men (-0.2 ppts).

  • BRK-B and BAC are the top two financials held by both genders; BRK-B is #1 for women, and BAC is #1 for men. Interestingly, women hold AMTD as their #3 financial stock, which doesn't show up until the fifteenth spot for men's financial stocks. #7 for women, C, is #3 for men.

Women hold 12.1 percent of their equities in energy, versus 12.5 percent for men (-0.4 ppts).

  • Both genders hold XOM, CVX, COP, EPD, BP in the same order as their top energy stocks, but Women are way more concentrated in XOM than men – XOM is 20 percent of their energy stocks, versus 11 percent for men.

Women hold 10.5 percent of their equities in consumer discretionary, versus 11.1 percent for men (-0.6 ppts).

  • Both women and men hold DIS and F as their top two in this sector; the preference fits with traditional gender roles – women's #1 is DIS, and men's #1 is F. Both hold AMZN as their #3.

Women hold 10.0 percent of their equities in healthcare, versus 9.5 percent for men (+0.5 ppts).

  • Similar to the energy sector, both genders hold JNJ, PFE, MRK, GILD, BMY and AMGN as their top healthcare stocks in the same order, but women have a higher concentration in JNJ (14 percent of their healthcare) than men (9 percent).

Women hold 8.8 percent of their equities in industrials, versus 9.1 percent for men (-0.3 ppts).

  • GE is over 20 percent of both gender's industrials stocks, followed by CAT (~6 percent for each).

Women hold 7.9 percent of their equities in consumer staples, versus 6.4 percent for men (+1.5 ppts).

  • Both genders hold PG, PM, MO, KO, WMT, PEP and COST in the same order.

Women hold 3.9 percent of their equities in utilities, versus 3.2 percent for men (+0.7 ppts).

  • Both genders hold DUK, SO, ED in the same order with virtually the same concentration (11 percent, 10 percent, 7 percent, respectively).

Women hold 3.8 percent of their equities in materials, versus 4.6 percent for men (-0.8 ppts).

  • FCX is the top materials stock held by both genders.

Women hold 3.7 percent of their equities in telecom, versus 3.2 percent for men (+0.4 ppts).

  • T and VZ are by far the highest concentrations in both genders telecom portfolios, making up 78 percent of women's telecom and 70 percent of men's.

BZ: Do you have any suggestions or pieces of advice for women
investors?

NS: As primary consumers in the household, women make over 85 percent of the purchases for the home. They put a lot of thought into their purchases and tend to do extensive research into companies, products, services and brands they use every day. They know a great deal about the best brands for the best value. So, they shouldn't find it a stretch to apply those same principles to investing decisions.

Here are a few other tips to build investing knowledge and put those skills to good use:

  • Practice: Gamification can be a great way to gain exposure to the trading world. Several websites allow users to experience the stock market using fake money, like TD Ameritrade's thinkorswim platform.
  • Read: Publications like Benzinga, Barron's or Bloomberg Businessweek are full of information on markets, industries and individual companies. Here are several great books for those who are just getting started, or I also did a webcast series on investing topics that your readers can check out at www.tdameritrade.com/up.
  • Partner: Sometimes investors just need someone in their corner to talk to and learn from. Whether it's a friend or family member, online resource or even a like-minded investing expert on social media, identify similar mindsets for your investing journey.

Posted-In: Barron's BusinessWeekEntrepreneurship Exclusives Tech Personal Finance Trading Ideas Interview Best of Benzinga

 

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