The SPDR S&P 500 ESG ETF (EFIV) is one of the faster-growing environmental, social, and governance (ESG) exchange traded funds on the market today.
That status is easily explained. EFIV offers advisors and investors one of the least complex approaches among large-cap ESG ETFs, and its heritage is notable. It tracks the S&P 500 ESG Index, which is the ESG derivative of the standard S&P 500.
Not only is EFIV’s DNA relevant from the standpoints of brand awareness and trust, the ETF’s underlying index and focus on domestic stocks is pertinent because U.S.-based companies are doing better on the gender diversity front than other large markets.
“While most firms in our selected U.S. benchmarks have about 20%-40% women on the board, European firms tend to have between 30% and 50%, and firms in Korea and Mexico average far fewer women on the board,” noted S&P Dow Jones Indices. “Canadian firms, meanwhile, have a comparatively tighter range of values than their developed counterparts, with all boards having at least one female member, but none exceeding 50%.”
EFIV holds 304 stocks. Fortunately, the fund’s emphasis on ESG principles, whether by incident or intent, leads to favorable gender equality traits, particularly when measured against some widely observed emerging markets equity benchmarks.
“On average, for the majority of the indices studied here, the ESG version exhibited a greater percentage of women on the board than its benchmark, with only the Mexico- and Brazil-based indices as the exceptions,” added S&P Dow Jones.
It’s not surprising that EFIV offers investors solid gender equality credentials because investing to that effect very much fits with the governance aspect of ESG. Add to that — and this probably isn’t stunning to experienced ESG investors — some sectors are better at gender diversification hiring than others.
“In terms of sectors, firms operating in Energy, Consumer Staples, Information Technology and Health Care have a greater-than-average number of women on their boards, while Materials has the lowest average,” concluded S&P Dow Jones.
Technology and healthcare names combine for 45% of EFIV’s roster while the consumer staples and energy sectors combine for about 12.7% of the ETF’s roster. Investors looking for a dedicated approach to gender investing can consider the SPDR SSGA Gender Diversity Index ETF (SHE).
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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.