Research Roundup: Gender Lens Investing Options in Public Markets

This piece was originally published on, an independent knowledge hub about gender lens investing. Women Effect’s content is now part of the Wharton Social Impact Initiative. Read more about the transition here.

The following commentary was written by Luisamaria Ruiz Carlile of Veris Wealth Partners. It analyzes new research tracking the growth of gender lens investment across public equities worldwide.

We often frame our investment choices in either/or terms. Do we invest for societal and environmental benefits or purely financial returns? Do we opt for economic growth or a sustainable future?

This binary framework spills over into our views of who gets access to political and economic opportunities. Ingrained (and often subconscious) biases may lead us to believe that for minorities and women to advance, others must lose out. Or that if we choose inclusive companies we are settling for less than stellar outcomes. Our reality is seemingly zero-sum. But the gender lens investment approach (defined here) is actively seeking both/and opportunities.

Research To Date

In March of 2015, Veris published its second thought piece on this topic, titled Women, Wealth & Impact: Investing with a Gender Lens 2.0. We cited a range of research making the business case for investing in women and girls. Since then, consulting firms, think tanks, and financial institutions have produced an avalanche of fresh work affirming the strong links between gender parity and financial outperformance – see the Women Effect reading list for examples. In 2014, Veris began compiling a scan (or inventory) of investment opportunities with explicit gender lens mandates. While our scan encompasses private and public market opportunities, in this commentary, we focus exclusively on investment options that hold public securities.  Two years ago, we identified 9 vehicles investing in public securities with an explicit gender lens mandate: 6 in equities, 2 in fixed income and 1 hybrid ETN (exchange traded note). A majority were still in development or so new that they had yet to report assets under management (AUM).  As of September 30, 2014, 3 of the 9 public markets strategies reported investments totaling $100 million. Only the 2 mutual funds and the ETN were available to all investors. The remaining six were exclusive to clients of the sponsoring firms or available only as separately managed accounts with relatively high minimums. All strategies targeted U.S. investors.

Dramatic Growth In Gender Lens AUM

Fast forward 20 months and the total AUM that has grown almost fivefold, with 6 new strategies added to the mix. As of June 30, 2016, 15 gender focused vehicles investing in publicly-traded securities are now available, with 12 strategies disclosing a combined $561 million under management. Two of the new vehicles target non-U.S investors, including Canadian and those in select European and Asian countries.The biggest splash occurred March 2016 when State Street Global Advisors launched its Gender Diversity Index ETF identified with the ticker symbol ‘SHE’.  Seeded in March 2016 with an initial $250 million from Calsters (California State Teachers Retirement System), this ETF single handedly accounts for half of the growth since 2014 of AUM invested with a gender lens.

Investment in Gender Lens Strategies Reporting AUM
($561 Million as of June 30, 2016)

Investing With The Low Hanging Metric: Women’s Leadership

Given that the easiest data to gather entails simply counting the number of women who are CEOs, CFOs or board members, ‘women’s leadership’ is often the heaviest weighted (or the only) criteria guiding security selection across GLI strategies investing in public securities.

“As of June 30 2016, 15 gender focused vehicles investing in publicly-traded securities are now available, with 12 strategies disclosing a combined $561m under management.”

Among the 15 public market options included in our scan, half focus almost exclusively on the presence of women in leadership positions at the board and/or executive level. One strategy’s only criterion is a female CEO. A second manager only requires three women board members. Three strategies use a simple ‘either/or’ approach, requiring either a minimal percentage of women on boards (20%-25%) or that a woman fill a top executive post (e.g., CEO, CFO and/or Board Chair). Two funds score companies by assigning weights to the various leadership posts women hold and to their percentage participation on boards and in senior management.

With their primary focus on readily available ‘leadership metrics,’ all seven strategies are essentially ‘pure plays’ on women’s presence in the board room and C-suite as a meaningful driver of financial outperformance.

Strategies Incorporating Women’s Leadership And Additional Criteria

For 8 of the 15 gender lens strategies in our scan that invest in public securities, women’s leadership is important, but not the only or principal criteria. Other factors that determine security selection include: wage parity, retention and development of female talent, the extent to which products and services are beneficial to women and girls, women’s access to capital, portrayal of women in marketing campaigns, and supply chain policies guarding against under age workers, human trafficking and unsafe workplaces. Several strategies also take into account whether companies are signatories to the United Nations’ Women’s Empowerment Principles.

As investors increasingly value gender diversity, they are demanding data beyond merely counting women on boards or in executive positions. The next frontier is meaningful disclosure by companies of data they may already be tracking internally, such as the pay ratios of male and female employees in comparable positions. In fact, companies and regulators such as the SEC (Security and Exchange Commission) and the EEOC (Equal Employment Commission) are fielding increasing requests for better corporate disclosure of gender pay ratios on an annual basis.

In addition to the dedicated gender lens products highlighted in this overview, investors interested in advancing opportunities for women can also consider strategies from managers that, while not offering products explicitly branded as ‘genders lens,’ are integrating comprehensive gender criteria into their security selection process. Managers committed to improving workplace equity and diversity include, among others:  Boston Common Asset Management, Calvert Investments, Trillium Asset Management, Walden Asset Management, and Zevin Asset Management.

Concluding Thoughts

In this commentary about trends in gender lens investing we have highlighted: (1) the increasing number of investment options and the growth in total assets flowing to them, and (2) the criteria asset managers are using when applying a ‘gender lens.’ In future commentaries, as information is available and the strategies establish track records, we will assess their financial performance and provide insights into the underlying companies held in these investment vehicles.

In closing, gender lens investing is about the centrality of women’s participation at all levels of social and economic activity. Consciously investing in women and girls exposes how long we’ve settled for less than our full potential.  Imagine the boost to innovation arising from non-traditional collaborations, the possibilities beckoning from mining with open minds our vastly different life experiences.

And so it’s time. Short the status quo. Adopt ‘both/and’ thinking. Go long on deep and diverse talent pools.