Gender Lens Investing
By Harshita Mira Venkatesh
“Study after study has shown that when women are fully empowered and engaged, all of society benefits” according to Deputy United Nations secretary Asha-Rose Migiro.
While there are plenty of initiatives on a global scale to empower women in society, much progress still needs to be made in the corporate world: only 13 of the 500 largest corporations in the world have female CEO’s.
Women have been hindered in the corporate world because on average, they have less access to capital than men. In practice, this means that if a man and a woman both held the exact same job then on an average the woman would be earning less, and would face more discrimination because of her gender.
Additionally if the woman were from a minority race, the level of discrimination increases and her access to capital decreases even further. In broader terms, women haven’t been able to succeed not because of genetic predisposition but because of the dearth of resources available to them.
As investors and global citizens we need to begin re-evaluating the success of the companies and organizations today through gender lens investing.
Gender lens investing means evaluating companies based on how their contributions to enhancing the status of women either by evaluating them on criteria such as:
1) The number of women they have on their boards, in senior management or in the work force.
2) The efforts the company makes towards enhancing the status of women in the community though their Corporate Social Responsibility Efforts.
From an Investors Perspective How Effective is Gender Lens Investing?
A 2012 study from the Harvard Business School showed that companies with an average of three women on the board of directors have a Higher Return on Equity Invested (by almost 60%) compared to companies with absolutely no women on the board of directors.
It has also been observed that micro-finance institutions catering towards women clients have fewer write-offs and see regular streams of loan repayment.
And in 2009 a Silicon Valley study showed that venture funded companies which were run by women have 12% higher returns on average.
This just goes to show that gender lens investing may just be smart investing.
How should you begin gender lens investing?
As of this writing, there are 333 mutual fund products which cater to ESG criteria (Environmental, Social and Corporate Governance), and several of these products were modified with a gender lens investing focus. Here are a few notable ones:
The Calvert Foundation launched WIN-WIN (Women Investing in Women Foundation) which was started in 2012 and aims to invest 20 million dollars in organizations which empower women.
The PAX Elevate Global Women’s Index Fund, seeks investments that closely correspond or exceed the performance of the PAX Global Women’s Leadership Index (the first and only broad market index consisting of highest rated companies in the world in advancing women’s leadership as rated by PAX gender analytics). The fund has returned 8.13% annually since inception in January 27, 2011 till December 31, 2013. In this very same period the Index has returned 7.86% annually.
GWEF (Global Women’s Equity Fund) was a purely gender lens investing oriented fund launched by the Toronto based Global Women Equity Corp. in 2013. The fund tries to invest in companies which have demonstrated support for women’s causes and are leaders in promoting women in the corporate workplace.
On July 9, 2014 Barclays launched a Women in Leadership Index and ETN (Exchange Traded Note). The Barclays index includes 83 U.S.-based companies that are listed on the NASDAQ or the New York Stock Exchange and have at least $250 million in market capitalization. Thirty-five of these companies have female CEOs.
Gender lens investing doesn’t seek to isolate successful male dominated companies. Rather gender lens investing asserts that gender heterogeneity in corporations is conducive to more educated decision making and better performance. To learn more about gender lens investing consult your financial professional regarding the options available.
This blog post is contributed by Harshita Mira Venkatesh, a student at the University of Rochester majoring in Financial Economics and Applied Mathematics. Harshita was also a summer intern at Insight Financial Strategists LLC for the Summer of 2014. She intends to pursue a career in equity research analysis.
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