The last 25 years have been marked by a growing focus on diversity and gender inclusion worldwide, with specific strategies aimed at eliminating biases across all areas of society. This trend has also reached the investment sector and its investment criteria.
According to UBS in its Gender-Lens Investment report, the origins of gender-focused investing are deeply rooted in the collective effort to empower women. “However, it would be a mistake not to recognize the significant economic benefits that can result from it. Closing the gender gap in labor force participation and management positions could alone contribute up to 7 trillion dollars to global GDP. This number rises to between 22 and 28 trillion dollars if gender equality is achieved,” the report states.
These potential economic benefits are capturing the attention of governments and economists, who are implementing new strategies to strengthen the role of women in society. However, UBS also believes that investors can benefit from this momentum by identifying opportunities within the three gender-focused investment perspectives.
Investment Ideas With a Gender Perspective
The first perspective proposed by UBS is based on the idea that investments for women encompass a wide range of products and services that meet their needs. “We believe the most viable investment opportunity lies in emerging digital technologies,” the report states. In their view, many gender-focused efforts, such as those related to education or financial inclusion, have concentrated on serving women in emerging and frontier markets, often through philanthropic mechanisms such as blended finance and grant funding.
The second idea UBS advocates in its report is that investments in women represent, in their opinion, the most scalable and diversified investment opportunity, as they provide access to various industries, regions, and types of companies. In this regard, they explain that this includes more established approaches, such as “investing in companies with significant female representation in management positions, based on the investment thesis that diverse companies tend to achieve better financial performance.”
Lastly, the UBS report argues that “investments made by women offer the opportunity to incorporate capital with a more defined purpose into portfolios, with credible sustainable and impact investment solutions, as well as less liquid investments in private companies and assets that are likely to gain greater relevance.”
From Approach to Fund Construction: Three Examples
As a result of this approach, asset managers have created specific funds that incorporate the ideas proposed and analyzed in the UBS report. For example, in 2019, Nordea AM launched the Global Diversity Engagement Strategy fund, aiming to capitalize on the growing awareness of diversity and inclusion. According to Julie Bech, the fund manager, the strategy focuses on investing in companies that lead in gender equality and diversity while also engaging with those at the beginning of their diversity journey to help accelerate their progress.
“The strategy consists of a global equity portfolio with an additional level of social engagement. Stock selection is based on the multi-asset team’s quantitative model at NAM, which filters the most attractive investments using factors such as quality, value, momentum, and historical relative profitability. The strategy evaluates companies using a ‘diversity overlay,’ which assigns them a score based on four criteria: leadership diversity, talent pipeline, inclusion efforts, and diversity change,” Bech adds.
Along the same lines, the Mirova Women Leaders Equity Fund, launched in 2019 by Mirova, a subsidiary of Natixis Investment Managers, stands out. This vehicle invests in companies that contribute to the UN’s Sustainable Development Goals, with a special focus on gender diversity and female empowerment.
Also within the equity market, investors have access to the RobecoSAM Global Gender Equality Equities fund. According to the asset manager, it is an actively managed vehicle that invests globally in companies that promote gender diversity and equality. “Stock selection is based on fundamental analysis, and the strategy integrates sustainability criteria as part of the selection process through a specific gender-focused sustainability assessment. The portfolio is built from an eligible investment universe that includes companies with higher gender scores, based on an internal gender assessment methodology. This methodology covers various criteria, such as board diversity, pay equity, talent management, and employee well-being,” they explain.
For Guadalupe Barriviera
