Welcome to our #98 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
Happy New Year & it is good to be back!
In this week’s newsletter, we focus on gender lens equity investing, women in leadership and how to start investing in a gender lens fund.
A growing body of research demonstrates higher levels of women in leadership leads to outperformance and therefore better returns.
Don’t forget to listen to the interview with Angela Atherton, Co-founder and Principal of Parallelle Finance on The Purse Podcast to talk about gender lens equity investing. Please enjoy!
And you can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
Until next week,
Jana
Gender lens equity funds and women in leadership
What do you need to know before investing in a gender lens fund?
According to Parallelle Finance, there are 27 gender lens global and regional equity funds available to individual investors. And the total assets under management (AUM) is $3.47bn (approximately £2.54bn) as of 30 June 2021, which represents a 32% increase during the first half of 2021 (as reported by City AM).
10 that are global equity funds (invest all over the world)
17 have regional offerings.
***
We interviewed Angela Atherton, Co-founder and Principal of Parallelle Finance about gender lens (equity) investing and women in leadership.
Here are some key highlights from the interview on The Purse Podcast:
What is gender lens (equity) investing?
Gender lens investing is a strategy that seeks to achieve a market rate of return, by investing in businesses that demonstrate the promotion of gender equality opportunities for the women, as employees, as business owners and as consumers.
Women-owned businesses and gender conscious businesses require a full spectrum of capital which includes public equity and debt and private equity and debt.
Why should investors care?
Gender lens investing allows investors to derive a market rate of return in a socially conscious way.
In 2015, McKinsey did a study and found that closing the gender gap could add $28tn to the global GDP by 2025.
This is why ESG is growing as a sector.
How does it relate to ESG?
The majority of asset managers and funds are placing gender lens funds under a larger ESG thematic umbrella.
Investors are looking at environmental, social and governance issues. It is about investors who want to fund a sustainable economy.
And equality is part of a sustainable economy.
However, it makes sense to see gender equality as an overlay on ESG. Investors should consider components of ESG; climate change, various social issues, governance with a gender lens.
There potential for further growth in the market.
The business case for gender lens investing
A growing body of research demonstrates higher levels of women in leadership (and diversity in leadership) teams leads to:
higher return on capital
better productivity
higher stock price performance
and better risk management.
In 2018, the Bank of America did a study of companies and its investment universe. They found that higher levels of women in leadership led to or were correlated with higher one year return on equity among the universe.
And they looked at data from 2005 to 2016.
In 2021, Morningstar released a report which looked at companies in the UK, the US and Canada and found that companies with more female executives and directors had better share price returns.
One of the specific findings was that companies with more than 50% female executive and directors:
averaged a 3-year annualised share price return of 13.5%
vs the the broad market returns of 4.8%.
Gender lens equity funds: why invest, how does it work? What's the criteria for companies to be in the ETF or index?
The data demonstrates the outperformance of women in leadership. And that is the investment thesis for these set of funds.
The gender lens criteria for companies in the ETF or index (includes):
the number of women on the board
the number of women in the C-Suite/senior management
gender equality across the entire organisation
the recruitment/retention of women
creating opportunities for women including promotion, training
female-friendly policies including flexible working, anti-sexual harassment.
Retail investors should look at the size of the fund (AUM) and its performance history, whether to invest in a fund with global and/or regional coverage. And whether the fund has an active or passive management strategy.
Pax Ellevate Global Women’s Leadership Fund…
… is on track to hit $1bn in assets under management.
This is the longest running fund in the gender lens equity fund coverage universe. It launched in October of 1993.
They develop an internal index of companies. And this fund invests in over 400 companies around the world with the most favourable gender leadership characteristic.
UBS (ETF) Global Gender Equality..
…is the second largest gender lens equity fund. It is also approaching $1bn in AUM. It is a global fund with a passive management strategy.
They seek to replicate a gender lens index called the Solactive Equality Global Gender Equality 100 Leaders Index and Equileap is a leading data provider. They specialise in carrying out the corporate gender metrics assessment.
They look at 4,000 companies all across the globe and UBS is able to use this index as a driver to their investment methodology.
How can you start investing in a gender lens fund?
Reach out to a financial advisor or a fund management company like Fidelity International.
Invest in an ETF (gender lens fund) via an online investment platform or mobile app such Robinhood (US), Public.com (US) or Wombat (UK).
News in Brief
Financial news
Global stocks delivered third year of double-digit gains. The FTSE All-World share index rallied 16.7% in dollar terms in 2021 vs the huge 24% jump in 2019, the year before the coronavirus crisis. The S&P 500 was up 27%
The Nasdaq 100 Index drops 4.5% in the worst week since February 2021 as yields rise. Index is now down 5.9% from it all-time high. Investors rotate out of US tech stocks.
US Federal Reserve officials expect 3 interest rate in 2022. The first interest hike is expected in March 2022. There is rising ‘discomfort’ with US rate of inflation.
US 10 year treasury yields jump to highest since January 2020.
US employment falls to 3.9% as more people find jobs (early December) even as employers added a modest 199,000 jobs (evidence that they are struggling to fill jobs with many Americans reluctant to return to the workforce).
Britain’s stalling economy is blamed on inflation and product shortages. UK inflation is (currently) 5.1% and the Bank of England (BoE) raised interest rates from 0.1% to 0.25% in December 2021.
UK house prices jumped by 9.8% during 2021, hitting record highs. This is the sharpest annual increase since July 2007. House prices rose by 1.1% in December alone, the sixth monthly rise in a row.
Crypto: bitcoin, ethereum, DeFi & NFTs
Major cryptocurrencies plummeted Thursday, including bitcoin and ethereum, after the US Federal Reserve signalled an interest rate hike. With anticipation of interest rate hikes and tapering of bond purchases (slowing money printing or quantitative easing) in 2022, the crypto market is down.
Bitcoin has hit its lowest price since September 2021 at $41,000+. It fell by 10% in the first week of 2022 (& is down 40% from its all-time high). Bitcoin is currently trading at $41,500+.
Ethereum’s price dropped below $3,200 Thursday night and again Friday morning and is currently at $3,089+.
Report: Solana, Terra and Polkadot are growing faster than ethereum did. However, ethereum has the lowest level of attrition. Ethereum still has the largest developer ecosystem, though Bitcoin has fallen to fifth.
BTC and ETH are heading to new all-time highs in 2022, according to a Bloomberg intelligence analyst. Mike McGlone believes that bitcoin and ethereum will hit $100,000 and $5,000 respectively this year.
Opensea is valued $13.3bn (raising $300m in Series C) as ethereum NFT market booms again. OpenSea has hosted some of the most popular Ethereum-based NFT collections in the space, including Bored Ape Yacht Club and CryptoPunks.
The Purse Podcast
We cover the following in our conversation:
gender lens (equity) investing
gender lens equity funds performance
how we achieve gender parity?
how to start investing in a gender lens fund?
and more.
Please enjoy! Listen on all podcasting platforms including iTunes and Spotify.
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We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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The Purse provides content for informational purposes only, we do not recommend products or services or provide investment advice. Please do your own research or speak to a financial advisor.
Gender lens equity investing: women in leadership and how to start investing. And listen to the podcast interview with Angela Atherton about gender lens investing