Sallie Krawcheck and Pax team on women-friendly corporate index fund

Ex-wirehouse executive says values and returns can align when advisers invest in gender diversity

Jun 4, 2014 @ 10:59 am

By Trevor Hunnicutt

sallie krawcheck, pax world, 85 broads, ellevate, mutual fund, index, women
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(Bloomberg News)

Sallie L. Krawcheck is throwing her weight and her money behind a revived mutual fund that invests in publicly traded companies that have greater numbers of women in management positions.

The Pax Ellevate Global Women's Index Fund (PXWEX) is being managed by a partnership that includes an asset management firm owned by Ms. Krawcheck, the former Wall Street banking and brokerage executive who now runs a network of women professionals recently renamed Ellevate from 85 Broads. The partnership was announced Wednesday.

The fund, which backers say is the first of its kind, succeeds a now-defunct actively managed product, the Pax World Global Women's Equality Fund.

The fund is the latest to capitalize on a trend in values-driven investing, which is among the themes wealth management executives say will drive product development for younger investors. Last year, a team at Morgan Stanley launched a "parity portfolio," which invests in U.S.-based companies with a commitment to including women on their boards.

“The research is telling us that this is something that women in particular, but other categories of investors, are looking for,” Ms. Krawcheck said in an interview.

(Don't miss: Schwab Advisor Services' Neesha Hathi on Three steps to greater gender diversity in the RIA industry)

Pax World Management chief executive Joseph Keefe said the product could be a core portfolio holding. He said the “enhanced” index, which has been designed in consultation with MSCI Inc., offers exposure to 406 companies around the world with a greater proportion of women on their boards and in executive management, according to research by Pax. They also meet environmental, social and governance standards set by MSCI.

His firm is citing — among other studies, 2007 research by the nonprofit research firm and advocate Catalyst Inc. that found firms with women on their boards see stronger returns on equity, sales and invested capital.

Women hold about one third of board seats in companies in the fund and 24% of senior management positions. That compares with 11% global averages in those categories, according to Pax.

Ms. Krawcheck said that, while returns are important, investors are looking for more opportunities to incorporate their values when investing. Citing research that most women leave their financial adviser when their spouse dies, Ms. Krawcheck said women investors are among those looking for a different experience with their financial adviser than a traditional, returns-oriented discussion.

“In all the years I've been in the industry there was no client who could tell me what the returns were ever. Ever,” said Ms. Krawcheck, who previously ran the Smith Barney and Merrill Lynch brokerages. “For large swaths of the potential client base it's not just about returns. … Meeting their goals is not always about this many basis points.”


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