Gender-Lens Investing

By TRG Advisors on March 9, 2022

Wealthy investors who want to generate social impact in addition to financial profits have a widening number of investment options to consider. Many women and some men are finding a particular affinity with funds and other products that are built with a “gender lens.”

Gender-lens investments put money to work supporting companies and initiatives that aim to close the “gender gap,” generally considered to be the differences that men and women encounter when it comes to economic attainment, as well as social, political, and cultural attitudes.

Firms and projects at the core of these investments need to show that they are working intentionally to shrink the divide between the sexes and prove the changes in measurable ways. For instance, a company may equalize salaries for men and women performing the same job or boost the ratio of women in leadership roles.

Supporters of gender-lens investing contend that this focus on equality results in other benefits to the organization, too. Studies show that having more diversity among employees fosters creativity, talent retainment and stronger financial performance.¹

Three types of gender-lens approaches

01

Some initiatives support companies that outright advance the opportunities women have to succeed, such as funding women-owned businesses. Think of private equity or venture capital that supports female entrepreneurs, who as a group are much less likely than men to be offered funding to start or grow businesses.  

02

Certain gender-lens investments back products or services that improve the lives of women — for instance, firms in the “femtech” sector such as software and technology companies that address women’s biological needs. Examples include solutions for pregnancy, breastfeeding, and tracking fertility. 

03

Other approaches support companies with internal policies, culture and other organizational structures that incentivize both leadership and employees to demand equal pay, promotion, and respect for women and men.

Rising Demand and Products

Gender diversity is an area that 67% of asset owners around the world say they are interested in supporting with their investment portfolios, according to a 2020 Morgan Stanley Institute for Sustainable Investing survey. Financial firms are responding by introducing more gender-focused investments.

One of the oldest is the Pax Ellevate Global Women’s Leadership Fund, which invests in companies rated highly for advancing women through senior leadership teams, board diversity and other policies that support gender equity. The SSGA Gender Diversity Index³ is an exchange traded fund designed to measure the performance of large capitalization U.S. companies that exhibit gender diversity in their senior leadership positions.

There have been 11 new gender-lens equity funds created just since 2018, according to Parallelle Finance. That firm tracks about 30 stock funds that incorporate a gender lens, with total assets of $3.6 billion. That total is up from about 35% the previous year.

Rising Importance Post Pandemic

The global pandemic has intensified the need for women-focused projects and other opportunities that aim to level the playing field between men and women.

Covid-19 has had a disproportionate effect on women because they are more likely to be working in sectors negatively impacted by the pandemic, according to McKinsey & Co. research.⁵ Women also are more likely to act as caregivers, so when schools shut down, women were most likely to give up their jobs to care for children. 

Gender-lens investments can be a way for women — and men — who want to see the gender gap closed, use their portfolios to support companies and projects that are making impactful changes. Reach out to us today for more information.

^{¹ Source: “Diversity Confirmed to Boost Innovation and Financial results,” Forbes, Jan. 15, 2020.
² Source: “Impax Asset Management.”
³ Source: “SPDR® SSGA Gender Diversity Index ETF.”
⁴ Source: “Q4 2021 Gender Lens Equity Fund Performance,” Feb. 27, 2022.
⁵ Source: “COVID-19 and Gender Equality: Countering the Regressive Effects,” July 15, 2020.}