Did you know that some large-cap, blue-chip companies like Accenture (ACN) (run by Julie Sweet), Northrop Gruman (NOC) (Kathy Warden), Oracle (ORCL) (Safra Catz), Occidental Petroleum (OXY) (Vicki Hollub), and Progressive (PRGR) (Tricia Griffith) have a female CEO? There are also female CEOs of small- and mid-sized companies like Exponent (EXPO) (Catherine Ford Corrigan), Oil States International (OIS) (Cynthia Taylor), Opendoor Technologies (OPEN) (Carrie Wheeler), PagerDuty (PD) (Jennifer Tejada), and SecureWorks (SCWX) (Wendy Thomas). We have long been taught the benefits to a portfolio through diversification, but more than 90% of the CEOs of publicly traded companies are men; the above names some of the rare counterexamples. A relatively-new active ETF seeks to provide advisors and end clients with greater gender balance — and ideally outperformance as well.
“It’s an economic drain on society to not take advantage of the intelligence and education of women,” explained Patricia Lizarraga, managing partner of Hypatia Capital. “It is harder for women to get to the top so those that do are extraordinary.”
The Hypatia Women CEO ETF (WCEO), which launched in January 2023, owns shares of approximately 120 companies in an equally weighted portfolio which have one major commonality: female CEOs. With a minimum market capitalization for its holdings of $500 million, WCEO is a mix of large-, mid- and small-cap companies.
“People tend to focus on who the leader is of companies in the early stages of development but there are some great public companies run by women.”
Hypatia Capital monitors SEC filings to track when there are CEO changes, and whether the executive is female. Unfortunately, the small number of female CEOs means that the management team does not have to select among the companies based on other factors. The ETF is rebalanced monthly and is industry neutral to isolate what Hypatia refers to as the “female factor”.
While the ETF has a short trading history, the Hypatia Women CEO Index launched in January 2018. Between then and March 2023, the governance-focused index rose 9.2% and outperformed its FT Wilshire Small Cap Index by 278 basis points on an annualized basis, proving that who runs a company does indeed matter.
With the usual caveat that past performance is not indicative of future results, people who believe in gender equality might want to look at WCEO, and not only during Women’s History Month. Other ETFs focused on gender diversity include the SPDR SSGA Gender Diversity Index ETF (SHE) and the Impact Shares YWCA Women’s Empowerment ETF (WOMN).
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