As environmental, social, and governance (ESG) and sustainability investing benefits gain more acclaim, the universe of related concepts is expanding.
That includes gender-driven investing strategies. Enter the SPDR SSGA Gender Diversity Index ETF (SHE). SHE follows the SSGA Gender Diversity Index, presenting investors with a basket of companies with superior gender diversity in senior leadership roles relative to other companies in their sectors.
This isn’t a gimmicky strategy aimed at capturing assets from virtuous investors. Rather, SHE and the concept known as gender-lens investing can deliver for investors. Gender-lens investing is broad, encompassing ideas such as investing in companies run by women, those scoring well on gender equality metrics, and more.
“The second category uses a gender lens to help assess the quality of an investment. For example, it might include strategies that examine workplace culture and a company’s commitment to gender equality as part of their due diligence. Individual investors can take this approach when assessing companies,” notes Margaret Giles for Morningstar. “This approach can help mitigate environmental, social, and governance risk–companies with greater gender diversity and better workplace environments face less potential reputation risk from inappropriate behavior by senior management, for example.”
SHE, which is six years old, holds 191 stocks. The fund’s components score well in terms of gender diversity in top management roles, including chief executive officer. For investors, that’s an important trait because various studies suggest that women-led companies can and do generate impressive long-term returns and outperform male-led rivals.
Examining SHE from a sector perspective, the fund allocates almost 42% of its roster to technology and healthcare stocks, while the consumer discretionary and industrial sectors combine for almost 21%. None of the fund’s components exceed an allocation of 6.11%. Additionally, SHE is something of a pioneer in a fund category that has ample room for growth as gender-lens investing itself grows and gains more notoriety.
“Parallelle Finance identified 26 gender lens investing equity funds with $3.56 billion in assets as of Sept. 30, 2021. Total net assets climbed to roughly $4 billion as of Jan. 31, 2022. Meanwhile, fixed-income funds and products had assets of $8.41 billion as of Sept. 30, 2021, according to Parallelle’s Gender Lens Investing Q3 2021 Review,” adds Morningstar’s Giles.
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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.