Investment Strategies

Investing in women a worthy strategy

How financial advisers can put this strategy into practice and begin to invest with a gender lens

Nov 22, 2015 @ 12:01 am

By Kathleen McQuiggan

Gender equality has garnered significant attention in the investment community — and our society as a whole — in recent months. The #HeForShe campaign continues to gain steam, companies like Google and Intel are pledging significant capital to address workforce diversity, and new gender lens investment vehicles are being launched.

It is becoming clear that businesses that ignore what women can bring to the table are handicapping themselves and will eventually fall behind in the emerging global economy. Conversely, those businesses that invest in and empower women will have the advantage. Many investors believe that the latter will be stronger companies and better long-term investments.

The case for investing in women is truly compelling — improved operational and financial performance; increased innovation, better problem solving and group performance, and enhanced company reputation are just some of the positive outcomes of gender equality in the workplace. Investing in women can provide huge payoffs for businesses and the larger economy.

So how can financial advisers put this strategy into practice and begin to invest with a gender lens? The concept of “gender lens investing” is still an emerging discipline and we are seeing firms approach it in a variety of ways. The three primary methods that we have seen advisers use include:

Creating a gender lens impact portfolio. A good example of this approach is the women's inclusion portfolio developed by Veris Wealth Partners. Veris created a gender lens portfolio at the request of a high-net-worth client who is evenly divided among index funds, public stocks and bonds, and direct, private-equity-like investments using a gender lens. We have also seen nonprofit women's organizations take a mission-aligned approach and invest their endowments in a gender lens or “impact” portfolio.

Using gender lens products in specific asset classes in a more mainstream portfolio. For example, we are seeing advisers who are looking for international exposure use our Pax Ellevate Global Women's Index Fund (PXWEX) in their international bucket, or the Breckenridge Capital Gender overlay strategy as part of their fixed-income allocation, or the U.S. Trust Women & Girls equality strategy in the all-cap-core allocation.

Thematically using a gender lens product in a client's existing portfolio. Different products play different roles in an overall portfolio, and integrating products that are using a gender lens is a way to enhance a portfolio, not limit it. For clients who express interest in gender equality and advancing women's leadership, advisers can recommend owning one of the products in the gender lens investing landscape as a thematic idea for their portfolios.

Regardless of which approach you take, it is important to remember that investing is about more than asset allocation and style boxes. It is about helping your clients achieve their goals and understanding what matters to them. And those goals often extend beyond just financial returns. Today's investors, particularly women, want to use the power of their money to make a positive impact, and they want their investments to be closely aligned with what matters to them. In fact, a study from the Center for Talent Innovation found that 88% of women want to invest in organizations that promote social well-being and 77% want to invest in organizations with diversity in leadership.

Incorporating a gender lens strategy into a portfolio can be a powerful way to help clients achieve their goals — both financial and social.

If the recent Impact Investing with a Gender Lens Conference is any indication, this strategy is continuing to gain momentum. The invitation-only event in Denver attracted more than 200 advisers, investors and thought leaders to discuss the latest strategies for investing with a gender lens. The key takeaway: Investing in women is smart business — and it is here to stay.

Kathleen McQuiggan is senior vice president of global women's strategies for Pax World Management and managing director of Pax Ellevate Management.

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