Companies with more women leaders perform better. That’s been demonstrated by a wide body of research and tracked by Parallelle Finance, an ESG consulting firm.
In its most recent Gender Lens Investing Q1 2023 report, Parallelle identified 43 gender lens equity funds available to individual investors, totaling $4.2 billion in assets as of March 31.
Among those are 21 global equity funds and 22 regional equity funds. The funds are domiciled in the U.S., Canada, Europe, South Korea, and Japan. There were eight new funds launched in the last 12 months.
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In the first quarter, assets in the global group decreased due to a decline in assets of the largest fund, while those of the regional group grew 14.8%, says Parallelle.
In addition to equity, gender lens fixed income funds stood at $8.9 billion in assets at the end of March, a 10.8% growth from the prior quarter.
Over the past 15 years, a range of studies found a “connection between higher levels of women in leadership (WIL) and higher return on equity, better profitability, lower incidences of fraud, and better risk management,” noted the report.
Funds that invest with the gender lens in mind use measures such as pay parity, pay gap reporting, work flexibility, anti-harassment policies, paid daycare, employee advancement training, and other factors that promote diversity, equity, and inclusion.
As of March 31, the best-performing gender lens equity funds in the U.S. were Calvert Sustainable Diversity, Equity and Inclusion Fund, V-Shares US Leadership Diversity ETF, Nordea Global Gender Diversity Fund, Nia Impact Solutions Fund, Impact Shares YWCA Women’s Empowerment ETF, Fidelity Women’s Leadership ETF, Fidelity Women’s Leadership Fund and Calvert Sustainable Developed Markets Equity Select Fund. Their three-month returns ranged from 7.05% to 10.04%.
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During the same period, the S&P 500 rose 7.36% and the MSCI All-Country World Index (ACWI) advanced 7.31%.
Among all the gender lens equity funds, Parallelle identified the top ten companies held by the most funds. Those are Microsoft, Apple, Visa, Accenture, NVIDIA, Merck & Co., Alphabet, Schneider Electric, and Procter & Gamble.
The top ten holdings reflected above-average women-in-leadership representation. For example, 35.6% of average board representation was above that of several key broad market indexes.
In addition, “61.1% of the top holdings have female board representation above the ACWI’s 32.2%, while the percentage of companies with representation equal to or above 40% has risen to 42.2%,” stated Parallelle.
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The overall CEO representation stood at 17.3%, which was more than double that of the S&P 500 with an average of 8.2%. Fortune 500 companies had an average of just 10.6%.
A similar situation applied to a female chair and vice chair representation, which stood at 14.1% for the top holdings. That was again more than twice the global average of just 6.7%.