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 assets under management invested in support of gender equality—called “gender lens investing”—increased from $100 million to $2.4 billion over the past four years alone.1
So what is gender lens investing? “It’s not small, soft and pink,” says Jackie VanderBrug, investment strategist at Bank of America. “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 MSCI ESG Research that shows that from 2011 to 2016, U.S. companies with at least three women on their boards experienced 10% median gains in return on equity and 37% gains in earnings per share.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, or offer STEM (science, technology, engineering, mathematics) tuition reimbursements, knowing that women in these fields experience a smaller gender wage gap and earn 35% more than those in non-STEM occupations.3
From 2011 to 2016, U.S. companies with at least three women on their boards experienced 10% median gains in return on equity and 37% gains in earnings per share.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, and she reminds investors that by 2020, women are expected to hold $72 trillion of private wealth, more than twice as much as 2010 levels.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.
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1 Veris Wealth Partners, “Gender Lens Investing: Investment Options in the Public Market.”, 2018.
2 MSCI ESG Research, “The Tipping Point: Women on Boards and Financial Performance,” 2016.
3 Department of Commerce, “Women in STEM: 2017 Update,” 2017..
4 Bank of America Merrill Lynch, “She-conomy”, 2019.
5 Past performance is no guarantee of future results.