The ETF offers an effective way to invest in firms that have a greater number of women represented in the upper management of their organizations relative to their peers. The underlying index ranks large- and mid-cap U.S. stocks on a few ratios that measure the number of women to men in executive and board roles and targets those with the highest scores, reflecting 10% of the market capitalization in each segment.
“There are numerous studies that show having a more diverse board, or one that at least made up three or more women, the companies outperform on a return of equity of upward 36% according to MSCI,” Mavro said.
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%.
Additionally, according to a 2015 McKinsey Global Institute report, if women participate in the economy identically to men, an additional $28 trillion, or 26%, may be added to annual global GDP by 2025, compared to a business as usual scenario.
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