Be part of helping to change the status quo—and pursue growth—through gender lens investing.
MUCH PROGRESS HAS BEEN MADE on the women’s equality front. But as long as the wage gap and unequal representation of women in management and government persist, there’s more to be done. The good news is that investors are playing a role in leveling the playing field for women.
A growing number of people are coming to realize that investing in companies that support women’s equality can benefit their portfolios as well as society.
A growing number of people are coming to realize that investing in companies that support women’s equality may benefit their portfolios as well as society. In fact, research from Veris Wealth Partners indicates that public market assets under management invested in support of gender equality—called “gender lens investing”—increased by $1 billion to $3.4 billion over the past year.1
So what is gender lens investing? “It’s not small, soft and pink,” says Jackie VanderBrug, head of Sustainable and Impact Investment Strategy for the Chief Investment Office at Merrill and Bank of America Private Bank. “It’s the deliberate integration of gender-based data into financial analysis, with the expectation of finding additional opportunities and uncovering and mitigating potential risks.”
Let’s break that down. From a practical perspective, it means investing in:
1. Businesses founded, run or funded by women. VanderBrug points to data by McKinsey showing that gender-diverse companies are more likely to outperform their peers, with the difference even more pronounced for ethnically-diverse companies.2
2. Companies whose policies encourage gender equality. More and more companies are taking steps to support equality. For instance, a company might choose to drop sexist stereotypes from its advertising, review promotion processes or offer STEM (science, technology, engineering, mathematics) tuition reimbursements, knowing that women receive a premium for working in STEM (salaries are 105% higher than those for women in non-STEM fields) but are more likely than men to work in the “STEM periphery”—roles in which they can apply STEM skills and expertise but are lower-paying than traditional STEM occupations.3
Gender-diverse companies are more likely to outperform their peers, and the greater the representation the higher the likelihood of outperformance.2
3. Companies that make gender equality—from the ground floor to top management—a priority. According to VanderBrug, companies that exhibit greater gender diversity not only among senior leadership but also in the rest of the workforce may experience better performance, reduced turnover and higher employee engagement, all predictors of higher earnings.
4. Companies that produce products or services that benefit women. VanderBrug points to efforts by one company to create software that is free of gender biases. She also notes that according to BofA Global Research, women’s accumulated financial assets are rising 1.5 times faster than men’s and could reach $110 trillion by 2025.4
Gender lens investing, says VanderBrug, is “a way to identify areas of opportunity in the search for enhanced investment returns.”5 If you’re interested in exploring it further, she recommends meeting with your advisor and asking how you might increase your portfolio’s exposure to the growing economic power of women.
1 Veris Wealth Partners, “Gender Lens Investing: Assets Grow to More than $3.4 Billion[AHG1] ,” 2020.
2 McKinsey, “Diversity Wins: How Inclusion Matters,” 2020
3 Drew M. Anderson, Matthew D. Baird and Robert Bozick, “Who Gets Counted as Part of America’s STEM Workforce? The Implications of Different Classification Approaches for Understanding the Gender Gap in STEM,” RAND Corporation, October 2018): p. 17-19
4 BofA Global Research, “Womentum!” 2020
5 Past performance is no guarantee of future results.