EQUL: An Equal-Weight Fund With an Impact | ETF Trends

Volatility seems to be a predominant theme for markets so far in 2022, and advisors are pivoting their investments into a number of different strategies to help mitigate portfolio volatility for clients. One such strategy has been investing in equal-weighted funds which can help reduce volatility by individual securities and even mitigate some volatility experienced by individual sectors, depending on how the fund invests.

One such fund that invests globally across sectors and employs an equal-weighting strategy is the IQ Engender Equality ETF (EQUL), a fund that seeks to harness the outperformance potential of diverse companies while also contributing to opportunities for girls in STEM through Girls Who Code.

Women remain largely underrepresented on executive boards within the C-suite and the workforce; a recent study done by Alpha Architect found that globally women serving in senior investment roles make up just 9% of CIO roles and head of research positions. Within the U.S., 12% of companies had women in head of research roles, while only 8% had women as CIOs.

EQUL seeks to invest in companies with a gender balance within their workforce, board of directors, and senior management, and evaluates the gender pay gap of companies, their sexual harassment policies, parental leave, and other metrics.

How the Fund Invests

EQUL is also an impact fund. It was created in alignment with Girls Who Code, a nonprofit organization that seeks to increase the representation of women in computer science by offering clubs and programs for any and all girls, half of which constitute historically underrepresented groups. IndexIQ donates a portion of its management fee to Girls who Code.

EQUL seeks to track the Solactive Equileap US Select Gender Equality Index, which includes U.S. companies of any market cap and the 75 highest-scoring companies. Companies are assigned an Equileap score that is 40% based on gender balance in the workforce and leadership, 30% on equal compensation and work/life balance, 20% on its gender policies, and 10% on its transparency, accountability, and commitment.

The index excludes companies that take certain percentages of their revenue from unconventional fossil fuels, nuclear energy, controversial businesses (gambling, adult entertainment, alcoholic beverages, tobacco products, cannabis, and military equipment), controversial weapons (anti-personnel mines, biological and chemical weapons, cluster munitions, depleted uranium, and nuclear weapons), or infringe or violate established international initiatives and guidelines.

Companies are also excluded from the index for a year if at any time in the previous two years they have engaged in unethical practices that involved discrimination of any sort against their employees.

EQUL carries an expense ratio of 0.45%.

For more news, information, and strategy, visit the Dual Impact Channel.