Gender investing is a relatively new phenomenon on the broader environmental, social, and governance (ESG) stage, but it is a credible avenue for investors looking to take proactive roles in terms of investing in improving various social inequalities.
That task is made easier thanks to a new generation of exchange traded funds, including the IQ Engender Equality ETF (EQUL). EQUL is relevant at a time when more investors are pressuring companies to prioritize gender equality and some corporations are responding to those demands.
“Corporations are instrumental to the advancement of women because they can provide a safe and fair workplace for all employees; investors have a key role to play in ensuring they do so. There are three timely issue areas that are top of mind for investors these days: reproductive freedom, pay equity, and gender parity in senior leadership and boards,” noted Gwen Le Berre, director of responsible investing at Parametric.
Supporting the long-term case for EQUL is the point that public companies with above-average gender diversity in the C-suite outperform less diverse rivals. In other words, there are tangible benefits for companies prioritizing gender diversity. On a related note, an easy way for corporations to bolster gender diversity is to ensure that they close and eliminate gender pay gaps. Investors are demanding as much.
“Six shareholder proposals asking for reports on race- and gender-based pay gaps have come to a vote in 2022, with average investor support of 38%, a large increase from last year’s 24% average. Moreover, two of these proposals have garnered majority support, one at Disney and the other at Lowe’s. Demonstrating the effectiveness of active ownership, Microsoft immediately committed to disclosing its gender pay equity ratio when 40% of its shareholders voted for a gender pay equity proposal last fall,” added Le Berre.
EQUL is relevant on that front as well because its underlying index is designed to focus on “women’s empowerment through equal compensation and gender balance in leadership and the workforce,” according to the issuer.
Bottom line: Gender-focused investing has ample room to grow, indicating that EQUL is relevant consideration for socially aware investors looking for long-term portfolio additions.
“Investors can help encourage progress within the companies in which they invest. This can be done either by voting for proposals and engaging with management to prioritize gender equality or by investing with managers who do this important work on their behalf,” concluded Le Berre.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.