Attendees at the recent Inside ETFs Conference in Florida show their support for ‘SHE’.

One of the best new exchange traded funds to come out in 2016 includes a strategy that focuses on companies with a number of women in leadership positions to potentially enhance investment returns.

At a shout-out in the Inside ETFs conference in Hollywood, Florida, the SPDR Gender Diversity Index ETF (NYSEArca: SHE), which began trading in March 7, 2016, was chosen as the People’s Choice: Best New ETF of 2016.

SHE is a well-timed idea, having debuted at a time when more and more investors, including institutions, are embracing ESG principles. In the past two years, there have been significant developments in Environmental, Social and Governance (ESG) index-based investing.

The Gender Diversity Index ETF tracks listed U.S. large capitalization companies with the highest levels within their sectors of gender diversity on their boards of directors and in their senior leadership.

Specifically, SHE is comprised of approximately 184 stocks from the largest 1,000 listed companies in the U.S., based on the presence of women at the CEO, board or senior leadership levels. The smart beta component seeks to minimize divergent sector weights versus the 1,000 largest listed US companies with the goal of isolating gender diversity as the primary factor exposure.

Top holdings include Pfizer 6.2%, PepsiCo 4.9%, Amgen 3.7%, 3M Company 3.5% and Mastercard Incorporated 3.4%.

Research and historical data have suggested that gender diversity may translate to outperformance. According to a 2015 MSCI study that explored global trends in gender diversity on corporate boards between December 2009 and August 2015, companies with at least three female board members outperformed others in overall return on equity by more than 36 percent.

Academic research also showed that men and women think, lead and solve problems differently. Research indicated that deploying these different approaches in concert can lead to better decisions, greater innovation and potentially stronger business results.

The ETF space, as well, has also experienced an increase number of women in leadership positions, which may bode well for the industry as a whole. On January 23, Women in ETFs, the first women’s group for the ETF industry, celebrated its third-year anniversary at the Inside ETFs conference. WE is a non-profit that brings over 2,500 members in chapters in major financial centers across the U.S., Canada, EMEA and Asia Pacific.

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