The outperformance of companies with higher women-in-leadership (WIL) metrics has led to the development of so-called gender lens investing. Within this emerging sector, total publicly available equity and fixed income offerings have grown to over $2.4 billion in assets under management (AUM). This paper summarizes the characteristics and recent performance of the publicly-traded equity funds within the sector.
Development of Gender Lens Investing
A body of research has demonstrated that stronger WIL metrics lead to superior company performance. In a 2007 study, Catalyst, a leader in promoting women’s workplace advancement, revealed that Fortune 500 companies with female board members outperformed those with none for return on equity (ROE), return on sales, and return on invested capital. The outperformance was notably higher for those companies with at least three women on their boards. In a challenge for corporations to avoid a “one and done” approach, three female board members became the magic number to boost performance. A 2012 Credit Suisse report demonstrated that companies with women directors performed better on a range of criteria and turned in better share price performance. In 2013, Pax World Investments asserted that these performance results pointed toward investing in women as an asset class. A company’s gender balance status – its WIL metrics – became investable.
Subsequent research confirmed these performance benefits, including a 2016 report by Credit Suisse, which showed that “the higher the percentage of women in top management, the greater the excess returns for shareholders”. A 2018 study by Bank of America showed that companies in its coverage universe with more women on their boards from 2005-2016 had higher one-year-forward ROE levels. Also, median one-year ROE was higher for S&P 500 companies with at least 25% female executives during 2010-16.
Gender Lens Equity Sector
Table 1 lists the primary publicly-traded gender lens equity funds available to individual investors, including mutual funds, ETFs, SICAVs, one ETN, and one unit trust. Some provide several share classes and multiple exchange listings. The funds are divided into global and regional equity, then ranked by AUM, which totals $1.3 billion.
|As of March 31, 2019*||Performance (%)|
|Inception Date||Ticker||AUM (USD M)||Equity Fund||Type of Fund||3‑mo||1‑yr||3‑yrs|
|4/19/06||PXWIX||$317.90||Pax Ellevate Global Women’s Leadership Fund||Mutual Fund||USD||12.7||5.8||10.7|
|MSCI World Index (net)||USD||12.5||4||10.7|
|Impax Global Women’s Leadership Index (net)||USD||11.1||6||10.7|
|12/19/17||GENDER:SW||$141.80||UBS Global Gender Equality UCITS ETF||ETF||USD||11.3||6.1|
|MSCI World Index (net)||USD||12.5||4||10.7|
|9/18/15||JBRGEBA:LX||$113.30||RobecoSAM Global Gender Equal. Impact Equities Fund||SICAV||EUR||14.3||16.7||12.2|
|MSCI World Index (net)||EUR||14.5||13.9|
|2/28/17||AXMPFDG:LX||$56.60||AXA World Funds Framlington Women Empowerment Fund||SICAV||GBP||10.9||18|
|MSCI World Index (net)||GBP||9.9||12|
|12/10/17||GEND:LN||$24.60||Lyxor Global Gender Equality UCITS ETF||ETF||USD||11.3|
|MSCI World Index (net)||USD||12.5|
|12/4/17||MWMN:CN||$6.50||Mackenzie Global Leadership Impact ETF||ETF||CAD||10.3||9.3|
|MSCI World Index (net)||USD||12.5||4|
|Global Equity AUM:||$660.80|
|3/7/16||SHE||$262.80||SPDR SSGA Gender Diversity Index ETF||ETF||USD||12||9.2||11.6|
|SSGA Gender Diversity Index||USD||12.2||9.2||11.8|
|7/9/14||WIL||$38.60||Barclays Women in Leadership ETN**||ETN||USD||3.7||4.2||10.6|
|7/7/14||Barclays Women in Leadership Total Return Index||USD||3.8||4.7||11.1|
|12/22/15||GWILX||$19.90||Glenmede Women in Leadership||Mutual Fund||USD||11||2.7||11.1|
|Russell 1000 Index||USD||14||9.3||13.5|
|8/24/18||WOMN||$4.00||Impact Shares YWCA Women’s Empowerment ETF||ETF||USD||12.9|
|Russell 1000 Index||USD||14|
|9/20/17||HERS:CN||$2.50||Evolve North American Gender Diversity Index ETF||ETF||CAD||12||7.2|
|Russell 1000 Index||USD||14||9.3|
|3/5/18||RLDR:CN||$183.70||RBC Vision Women’s Leadership MSCI Canadian Index ETF||ETF||CAD||12.1||8.2|
|MSCI Canada IMI Women’s Leadership Select Index||CAD||13.3||8.1|
|4/28/16||BMOWLFN:CN||$26.80||BMO Women in Leadership Fund||Mutual Fund|
|5/4/18||WOMN:CN||$1.40||BMO Women in Leadership Fund ETF||ETF||CAD||11.7||7.9|
|S&P/TSX Composite Index||CAD||13.3|
|5/10/18||LGGIRL:LN||$66.50||Legal & General Future World GIL UK Index Fund||Unit Trust||GBP||7.9|
|FTSE 100 Index||GBP||9.5|
|9/26/17||JP:1652||$12.50||Daiwa MSCI Japan Empowering Women Index ETF||ETF||JPY||7.5||-3.7|
|MSCI Japan Empowering Women Index||JPY||6.4||-5.7|
|9/13/18||DJWIX||$2.30||Dreyfus Japan Womenomics Fund||Mutual Fund||USD||4.8|
|TOPIX Total Return Index||USD||6.8|
|10/21/05||CGPVAFE:FP||$10.00||Valeurs Feminines***||Mutual Fund||EUR||9||-2.4||6.7|
As shown in Table 2, all of these funds are multi-cap or larger-cap, have relatively low investment minimums, and charge average fees. Most have launched since 2015, and they all utilize investment criteria centered on a WIL philosophy, typically combined with ESG screens. Many employ internal WIL tracking indexes. Solactive Equileap is the main provider of external WIL indexes, built from a universe of developed market stocks with market caps of over $2 billion. According to the latest Morningstar data on mutual funds and ETFs, less than 10% of all portfolio managers are women, a figure that has not budged in many years. In the gender lens sector, the available data shows that management teams are well ahead on this front, with over 60% female portfolio managers.
|Equity Fund||Expense Ratio||Style||# of Holdings||% Women Managmt||Investment Criteria|
|Pax Ellevate Global Women’s Leadership Fund||0.55%||Global Multi-Cap Core||410||50%||Tracks the Impax Global Women’s Leadership Index, based on MSCI World universe. Impax Gender Analytics criteria to measure WIL. Must be signatory to WEP*. Developed markets.|
|UBS Global Gender EqualityUCITS ETF||0.20%||Global All-Cap||100||unspecified||Seek to replicate the Solactive Equileap Global Gender Equality 100 Leaders Net Total Return Index; global leaders in gender equality, per Equileap screens. Developed markets. ESG exclusions.|
|RobecoSAM Global Gender Equality Impact Equities Fund||1.81%||Global All-Cap||unspecified||100%||Invests in companies that demonstrate high degree of gender diversity, as well as sustainability. Developed markets benchmark.|
|AXA World Funds Framlington Women Empowerment Fund||unspecified||Global Large-Cap Growth||unspecified||100%||Universe include all global equities. At least 2/3 assets in companies that demonstrate WIL commitment, adherence to WEP. Includes emerging markets.|
|Lyxor Global Gender Equality UCITS ETF||0.20%||Global Large-Cap Blend||unspecified||0%||Tracks the Solactive Equileap Global Gender Equality Net Total Return Index, an equally weighted benchmark of 150 global companies with high scores on Equileap gender criteria. ESG exclusions.|
|Mackenzie Global Leadership Impact ETFF||0.55%||Global All-Cap||408||66%||Invests in companies with women on boards or senior management, a female CEO or CFO, and signatories to WEP.|
|SPDR SSGA Gender Diversity Index ETF||0.20%||U.S. Large-Cap||166||100%||Tracks the SSGA Gender Diversity Index. WIL criteria, then sector ranked.|
|Barclays Women in Leadership ETN||0.45%||U.S. Large-Cap||n/a||n/a||The Notes are linked to performance of the Barclays index; U.S.-based companies with a female CEO or at least 25% female board members. Market cap, liquidity and other selection criteria.|
|Glenmede Women in Leadership||1.00%||U.S. Large-Cap Blend||65||0%||Constructed to proprietary quant models: WIL metrics, universe of SP500 or R1000, valuation, fundamentals, risk screen, sector/industry outlook.|
|Impact Shares YWCA Women’s Empowerment ETF||0.76%||U.S. Mid- and Large-Cap||218||0%||Follows Equileap gender equality scores, including leadership, compensation, policies.|
|Evolve North American Gender Diversity Index ETF||0.40%||North Amer. Large-Cap (85% U.S.)||147||unspecified||Seeks to replicate the Solactive Equileap NA Gender Equality Index CAD Hedged. U.S. and Canadian companies.|
|RBC Vision Women’s Leadership MSCI Canadian Index ETF||0.28%||Canada Equity||104||unspecified||Seeks to replicate the MSCI Canada IMI Women’s Leadership Select Index; Canadian companies with commitment to gender diversity.|
|BMO Women’s Leadership Fund||1.61%||North Amer. Equity (>50% in Canada)||unspecified||0%||Invests in companies demonstrating gender diverse leadership per proprietary WIL criteria.|
|BMO Women in Leadership Fund ETF||Tracks the BMO Women in Leadership Fund.|
|Legal & General Future World GIL UK Index Fund||0.50%||U.K. Large-Cap Blend||Index: 349||unspecified||Tracks the Solactive L&G GIL UK Index, with criteria for diversity across board, senior level and workforce. ESG exclusions.|
|Daiwa MSCI Japan Empowering Women Index||Japan Large-Cap Blend||214||unspecified||Tracks the MSCI Japan Empowering Women Index; sector leaders in diversity policies and promoting women across workforce.|
|Dreyfus Japan Womenomics Fund||1.25%||Japan Equity||51||33%||At least 80% invested in Japanese companies that benefit from the Womenomics initiative, which focuses on leadership, pay equity, and opportunities.|
|Valeurs Feminines||2.55%||European Equity||unspecified||0%||At least 75% invested in European companies from female dominated sectors.|
|*Womens Empowerment Principles: a joint initiative of the UN Global Compact and UN Women|
|Sources: Fund fact sheets, Bloomberg, Financial Times|
First-Quarter Performance Of Gender Lens Shares And WIL Metrics
In the global segment, all funds turned in positive absolute returns for the first quarter, in keeping with broader global shares. In relative terms, the Pax Ellevate Global Women’s Leadership Fund, which offers institutional and individual share classes, edged past the MSCI World Index. The fund manager recently noted that overweighting the highest WIL-rated quartile of companies has been making the strongest contribution to outperformance. The AXA fund also outperformed the MSCI World Index, and the RobecoSAM fund performed broadly in line.
The regional funds also ended the quarter higher. Here, relative performance was mixed. The two Japan funds turned in single-digit gains, with the Daiwa ETF outperforming its benchmark. On the other hand, the U.S. and Canada funds posted solid gains but trailed their benchmarks and major indexes. The Legal & General fund, which is closing in on the one-year mark, trailed the FTSE 100 Index.
The global and regional segments both have relatively short histories. How will this emerging sector hold up? Within the sector, can funds differentiate themselves through differences in philosophy and approach? Also, the impact of regional differences in WIL metrics bears watching, as does sector performance under different market environments.
Despite the advantages of higher WIL metrics, the sector is facing a lack of substantive progress for women in corporate leadership. While women comprise nearly half the employees of S&P 500 companies, they currently hold only 5% of the CEO positions , with only two positions held by women of color. Board seats hover stubbornly at just over 20%. In the U.K., the number of female CEOs in the FTSE 350 declined during 2018, while the number of board chairs rose only slightly. Globally, 15% of large companies across 44 countries still have no female board members. Furthermore, women hold only 5.6% of board leadership roles.
Many a spotlight has been pointed at these sticky metrics over the past several years, yet they remain stuck. It will be tough for gender lens funds to outperform and also expand market cap range in a limited investment universe. Furthermore, since 1972 a female Fortune 500 CEO has been succeeded by another woman only three times. Gender lens funds are thus faced with shifting in and out of the same investments as leadership diversity rises and falls at the company level.
Nonetheless, a push to incorporate gender diversity into investment criteria is gaining traction on Wall Street. In 2017 Morgan Stanley encouraged analysts to include gender scores in investment analyses. In 2018 State Street Global Advisors, which offers the SPDR SSGA Gender Diversity Index ETF, announced that it will begin voting against all-male boards in the U.S., the U.K., and Australia in 2020. Despite its own recent settlement of senior management pay discrimination allegations, the firm is pushing board diversity in a range of countries. With this heightened focus by asset managers, who share in the struggle to close gender pay and leadership gaps, more gender lens funds are likely to enter the sector. Avanza, a Swedish online broker and fund services provider, recently launched the AVA Gender Equality Tracker ETF in Stockholm.
This article first appeared in Enterprising Investor (CFA Institute) on June 24, 2019.