Gender Lens Funds: What Was the Influence in 2019?

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How did the first publicly traded gender lens fairness funds carry out final 12 months?

The latest monitor data of the funds accessible to particular person traders at the moment are obtainable. These portfolios embrace mutual funds, ETFs, SICAVs, one ETN, and one unit belief. Divided into six world fairness funds and 12 regional funds, they’re listed by AUM, which totaled $1.47 billion for the group as of 31 December 2019. (Abstract knowledge for these fund can be obtainable.)

12 months of the Gender Lens Fund?

Gender lens funds turned in a powerful efficiency in a powerful 12 months for equities. Seven funds have been above or in step with their benchmarks, together with all however one which use Solactive Equilep benchmarks. Six of the 18 portfolios now have histories of over three years, and 6 extra will cross that threshold in 2020.

An evaluation of one-year returns exhibits world gender lens funds are aggressive with key world women-in-leadership (WIL) indexes, notably the Solactive Equileap International 100 (SEG100) and the MSCI Girls’s World Management Index (WWL). Not one of the six world funds are benchmarked to the WWL, which holds over 600 shares. However 4 of those funds beat the 25.1% return generated by the WWL over the one-year interval. 4 of the worldwide funds additionally outpaced the SEG100’s 25.2% return, and three outdid the broader MSCI ACWI’s return of 26.6%.

From the regional group, the 4 US funds ended the interval up significantly. In a 12 months of document positive aspects for US equities, solely the YWCA ETF beat the Russell 1000 Index and the S&P 500, which rose 31.4% and 31.5%, respectively. Each the YWCA and Glenmede portfolios got here in forward of the MSCI Girls’s Management Index (USAWL), which returned 27.8%. The US-focused Evolve portfolio outpaced its benchmark, however trailed the S&P 500 Index (CAD). The Canada funds, together with the majority-Canada BMO fund, and the UK fund got here in modestly under their benchmarks. All three Japan funds outpaced the 17.2% efficiency of the MSCI Japan Empowering Girls Index, whereas the BNY Mellon fund lagged its ACWI ex-USA benchmark.

Ten of the 18 portfolios are ETFs, solely one in every of which, the Evolve ETF, took an equal-weighted method and was rebalanced at year-end. Two different ETFs, the Lyxor and UBS portfolios, additionally seem to have been rebalanced. Significantly in such sturdy markets as 2019, market-weighted ETFs favor outperforming and larger-cap shares, whereas smaller-cap shares have higher publicity in equal-weighted funds. How did that have an effect on 2019 returns on this group? US and world indexes have been impacted by the outsized returns of main tech shares. Certainly, Microsoft was the year-end prime holding in three of the six gender lens world fairness funds, one of many North American funds, and one of many US portfolios. Amazon, Apple, and Alphabet have been additionally amongst year-end prime 10 holdings for a number of funds.

These outcomes elevate some attention-grabbing questions: Does WIL at bigger and outperforming companies benefit a stronger weighting than ladies’s management at smaller corporations? Are market-weighted gender lens funds dropping out on diversification advantages and the expansion potential from smaller companies?

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Calculating the Influence

The gender lens funds obtainable to particular person traders are a part of a wider focus alongside the capital markets spectrum, together with fixed-income funds and quite a few institutional funds and individually managed accounts. There’s additionally a rising highlight on elevating the extent of ladies in enterprise capital (VC) and on women-led start-ups. Many segments of influence investing even have a gender lens focus. Amid this backdrop, how do gender lens fairness funds have an effect on ladies? Who’re they investing in?

A take a look at the composition of this group demonstrates that almost all of those funds are large-cap, with the remaining multi-cap choices weighted towards large-cap holdings. Consistent with earlier analyses, financials was the largest AUM-weighted sector holding at year-end, adopted by info know-how, shopper discretionary, well being care, and shopper staples. All GICS sectors acquired gender lens allocation, with utilities, vitality, and actual property on the backside of the allocation checklist. Additionally consistent with mid-year outcomes, US holdings comprised the biggest AUM-weighted nation place, with a complete allocation of 54.4%, adopted by Canada and the UK. With the exceptions of Japan and Australia, the remaining prime 15 nation weightings have been in Europe.

Thus, as 2019 wrapped up, gender lens fairness funds held positions primarily in North American and European large-cap shares and have been weighted closely in the direction of financials and know-how, two sectors with well-documented gender equality gaps and challenges.

What portion of the world’s ladies are these funds investing in? Based mostly on common workers, S&P 500 corporations make use of roughly 25.7 million US employees. Girls make up 46.9% of the US labor pressure and 44.7% of S&P 500 workers. Meaning 54.4% of gender lens fairness investments are directed towards 12 million US employees. With 130.6 million full- and part-time US employees, this represents 19% of all ladies within the US labor pressure. This leaves 45.6% of those fund investments divided among the many feminine labor pressure contributors in predominantly developed economies.

Clearly there’s room for development for these funds and enlargement of the gender lens funding philosophy.

For extra evaluation from Marypat Smucker, CFA, go to Parallelle Finance.

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All posts are the opinion of the creator. As such, they shouldn’t be construed as funding recommendation, nor do the opinions expressed essentially mirror the views of CFA Institute or the creator’s employer.

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Marypat Smucker, CFA

Marypat Thenell Smucker, CFA, is a author and analysis analyst with a give attention to gender lens and environmental, social, and governance (ESG) investing. Her work could be discovered at Parallellefinance.com.

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