Key Points:
- Gender lens equity investing has demonstrated the financial, risk management, decision-making, and corporate benefits of higher levels of women in leadership (WIL).
- There are 27 gender lens global and regional equity funds available to individual investors, with a total of $3.47 billion in assets under management (AUM) as of June 30, 2021.
- There is also a growing number of diversity, equity, and inclusion (DEI) funds targeting companies with robust DEI policies, with $154 million in AUM as of June 30.
- Gender-lens fixed income has seen strong growth, particularly in gender bonds issued by private financial institutions and development finance institutions (DFIs).
- The push to increase women in corporate leadership is slow, but government mandates, regulatory actions, and stock exchange listing rules are playing a role in driving change.
- Global asset managers have policies in place to support corporate WIL, but their approach to board diversity thresholds may not be aiming high enough.
- Some asset managers have signaled their willingness to vote against non-diverse boards and disclose diversity data and measures to improve it.
- Growing female representation on boards is progressing faster than C-suite gender diversity.
- Asset managers have the opportunity to boost corporate WIL within their own ranks and exercise stewardship towards board gender parity and higher female C-suite representation.
- There are currently three gender lens equity funds available to individual investors, with the UBS Global Gender Equality UCITS ETF having the highest AUM.
- No asset manager among the top 12 has sponsored or issued a gender bond, but some have had manager roles in gender bonds.
Gender lens equity investing has gained traction due to the financial, risk management, decision-making, and other corporate benefits associated with higher levels of women in leadership roles. Parallelle Finance covers 27 gender lens global and regional equity funds available to individual investors, with a total of $3.47 billion in assets under management (AUM) as of June 30, 2021. These funds have experienced a growth rate of 32% in the first half of 2021.
Aside from gender lens equity funds, there is also a growing number of diversity, equity, and inclusion (DEI) funds that target companies with robust DEI policies for investment. These DEI funds have a combined AUM of $154 million as of June 30.
In addition to equity investments, gender-lens fixed income investing has seen strong growth. The issuance of gender bonds by private financial institutions and development finance institutions (DFIs) has contributed to the development of this market. Latin America leads in the total number of gender bonds, with proceeds supporting women-owned enterprises in various sectors. The AUM of gender-lens fixed income reached $7.71 billion as of June 30, representing bond funds, US notes and certificates, a lending platform, and gender bonds in both developed and developing countries.
While progress for women in corporate leadership remains slow, government mandates, regulatory actions, and stock exchange listing rules are starting to drive change. For example, the US Securities and Exchange Commission (SEC) approved NASDAQ’s board diversity rule, requiring most listed companies to have at least two diverse directors or explain in writing why they don’t. The UK Financial Conduct Authority (FCA) has also proposed requirements for listed companies to comply with board diversity targets or provide an explanation, as well as publish diversity data on their boards and executive management.
Global asset managers play a crucial role in promoting women in corporate leadership through their stewardship policies and statements. Some asset managers, like BlackRock, have announced their intention to vote against non-diverse boards and push for diversity disclosure. However, an analysis of the diversity voting guidelines for the 12 largest global asset managers by AUM found that their approach to board diversity thresholds may not be aiming high enough. Advocating for one or two female board members falls short of the growing trend towards board parity, with a slight majority of S&P 500 companies now having at least 30% female board representation.
Gender diversity in the C-suite lags behind board representation, with a scarcity of female CEOs among the top asset managers. Only Fidelity has a female CEO among the top 12 asset managers. However, there are five female CFOs among these asset managers, and research suggests a correlation between an increase in profits and share prices and the presence of a woman CFO.
Among the top 12 asset managers, only three have gender lens equity funds available to individual investors. The UBS Global Gender Equality UCITS ETF has the highest AUM, followed by the SPDR SSGA Gender Diversity Index ETF and the Fidelity Women’s Leadership Funds. None of the top asset managers have sponsored or issued a gender bond, but some have had manager roles in these bonds.
Global asset managers have two areas of opportunity to boost corporate WIL. First, they can promote gender diversity within their own ranks, particularly in the C-suite. Second, they can exercise stewardship and advocate for board gender parity and higher female C-suite representation. These efforts can contribute to achieving greater gender equality in the investment industry and beyond.
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