These companies outperformed companies with both mostly male boards and lagging talent management practices and those companies had the lowest rates of employee productivity growth, relative to industry peers.
ETF Trends: What is unique about the launch of RLDR?
Frame: While the RBC product is the third gender diversity ETF to hit the Canadian market, it is the first fund to focus solely on Canadian companies.
Selecting a pure Canadian play on gender diversity might be seen as a sign of home country bias but there are many benefits to this ETF for a broad section of investors in Canada.
As a country, Canada has a very progressive view on moving towards improved diversity and gender diversity is an important part of that mission.
The opportunity to isolate Canadian companies who have moved toward this goal allows investors to uniquely benefit from the anticipated better outcomes for these companies in a single investment vehicle.
Experience from Japan where a similar ETF was launched last year has shown that some companies that did not originally qualify for index inclusion have taken steps to make changes in order to be included.
ETF Trends: Any comments on the U.S. markets and gender diversity ETFs?
One of the challenges of any ETF is the index construction and the drivers of that index that are outside of the primary focus of the ETF.
In the U.S., SHE has exposure to companies than are hurt and helped by tax reform and tariff discussions in different weightings than the broader indexes.
In Canada, RLDR is market weighted by sector. The TSX is a more volatile index as it is highly concentrated in three sectors (energy, materials, financials) which are quite cyclical, and has significant under-representations in information technology, health care, consumer staples and consumer discretionary, relative to the rest of the world. Also, the Canadian market has 36% of its capitalization in the top-ten stocks, compared to 17% for the US market.
But, history has demonstrated that in relative terms, regardless of the country, that companies that demonstrate a commitment to gender diversity have better investment outcomes than companies that do not.