Old Habits didn't make his way into Melodie Knuchell's investment portfolio in the usual manner. No slogging through the annual report, the prospectus, the press. Knuchell, 41, took one look at the gelding, which has a warm chestnut coat and white sock on his left hind leg, and decided to join nine other women to buy him for $18,500.
"He looked like a star," said Knuchell of Los Alamitos. None of her stocks and mutual funds had struck her in the gut like that.
Her instincts paid off. The 3-year-old has won $555,000 and is a leading contender to top the race rankings as the world's best quarter horse. His 10 co-owners, who say they are the first major all-female horse-buying syndicate, cheer him on in siren-red cowboy hats, boots and lipstick.
Through investments that include champion horses and female-friendly mutual funds, a growing number of women are making a statement with their money--and the financial world is taking notice. They are investing in record numbers and in different ways than men, sometimes looking for an emotional dividend alongside the cash one.
"I think women are absolutely the biggest force in the financial community," said David Bach, a financial advisor and author of "Smart Women Finish Rich" (Broadway Books, 1999). "You're going to see within five to 10 years that the majority of marketing dollars from the financial services industry will be targeted to women.
"What they first did was put women's faces on the covers of their mutual funds [brochures], or they put on generic seminars and called them, 'Women and Investing.' Now they're surveying women and trying to find out, 'What do you really want from us?' "
This month, for instance, Working Woman magazine co-sponsored "Marketing Financial Services to Women," a two-day conference in New York for financial professionals to discuss topics such as "the way women buy" and "what it takes to make women feel more confident and in control of their money."
The payoff for the industry is unmistakable.
Consider U.S. stock investors: 47% are women, up from 37% in 1990. The figure rises to 50% among both new and potential investors, according to a 1997 study by the Nasdaq Stock Market. And by at least one measure, women are getting better returns.
In the last three years, female-only investment clubs have reported an 18% to 20% return, compared with 10% to 15% for all-male clubs, according to the National Assn. of Investors Corp. in Michigan. Of the association's 36,633 investment clubs nationwide, 54% are women only.
The Web site, http://www.womenswire.com/money, one of several that target female investors, posts what it says is the first stock index that tracks publicly traded companies run by women.
For her part, Cathy Caballero, 51, puts stock in how companies treat women. The Malibu resident invests her money, including her 13-year-old son's college funds, with the Women's Equity Mutual Fund in San Francisco.
The $11.4-million fund invests primarily in companies that support the social and economic equality of women in the workplace. Fund managers screen companies using criteria such as whether they promote women to top executive positions or use female-owned companies as vendors. The fund, which began in 1993 with $52,000, has delivered a 14% annualized return since its inception, and 90% of the fund's investors are women.
"It's based on consciousness-investing," said Caballero, a real estate accounts manager. "Instead of just investing in companies where you're thinking about returns, this fund also thinks about the future, influencing the future and creating the future."
The lesson she wants to leave her son: "The rate of return isn't the only way to measure success. He knows about it, and little by little, things like investing in your future and investing your conscience start to make sense."
In the last few years, men and women have turned socially responsible investing into a large market. Some female investors are asking how they can use their money to promote stockholder activism, perhaps buying in blocs to try to influence a small company's policies, said Alissa Hauser, executive director of Resourceful Women, an investment education group in San Francisco. The group's average member has investable assets totaling $3 million to $5 million.
"We work with socially progressive, wealthy women, teaching them about using their money in service of a better world," Hauser said.
Personal Approach to Investing
According to one survey, women look for individual attention from financial advisors and value personal relationships when they make investment decisions. Sixty percent would make an investment decision if a trusted friend recommended it, concluded a 1998 Deloitte & Touche's report on affluent women and finances.
Often, women turn to other women with similar investment goals.