Welcome to our #149 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we spotlight our interview with Patricia Lizarraga who is the Managing Partner of Hypatia Capital, an asset manager focused on investing in women in leadership.
We talk about the launch of Hypatia’s Women CEO ETF in the US (NYSE: WCEO).
Listen to the full interview on The Purse Podcast here.
And don’t forget to 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
Investing in ‘The Female Factor’
Hypatia Capital recently launched Women CEO ETF (NYSE: WCEO). Why do women CEOs outperform?
We interviewed Patricia Lizarraga, Managing Partner at Hypatia Capital (US) a corporate finance advisory and asset manager about the launch of the Hypatia Women CEO ETF (NYSE: WCEO).
Patricia Lizarraga has over 25 years of investment banking experience at firms including Allen & Company, Citigroup, Credit Agricole, Donaldson, Lufkin & Jenrette and Santander Investment.
We talk about ‘The Female Factor’-why invest, why women CEOs outperform, the launch of WCEO ETF (US), aligning your values to investing, diversifying your investments to include gender equality and more.
Here is a short extract from the interview (we have edited down the response for ease of reading only):
Question: …What was the ‘aha moment’ when you realised that there was a competitive advantage around investing in women and specifically women in leadership…?
Patricia Lizarraga’s answer:
I believe every ‘aha moment’ is usually made up of hundreds, if not thousands of moments before that made you come to the realisation.
I think as women, we always know that we're just as good as men. And by the way, I don't think women are inherently better than men.
Our investment thesis is squarely in that women outperform because it's harder for women to get to the CEO spot.
And then as I wanted to start to have more female clients and started researching the possibility of doing that… Catalyst was already counting the amount of women on boards and saying that there was performance there.
And I thought to myself: ‘I think there might be a correlation’.
But I kept on going; I kept on building my business and about six years ago, we decided to hold an event that was not just about mergers and acquisitions (M&A), and it was not just about private equity, but was more pan asset class.
Because again, when I started Hypatia Capital there were also early stage investing clubs, angel clubs that started investing in women entrepreneurs.
The year before that State Street launched SHE and Pax Ellevate was repurposed to be about gender focus. UBS was just launching its gender focus ETF at the time.
So I said, wait a second: why don't we hold an event that talks about what's happening in investing in women in leadership in different asset classes?
And is there something that we can discover that will tell us that women actually outperform? How can we measure that? Is there an asset class in which we could measure that? And we set up the event, and we actually did it two years in a row.
It was when Bloomberg had just launched their Gender Equality Index. And so people were starting to think about this in a different way.
And when we thought about what asset classes can you actually isolate (what we call) 'The Female Factor' (all else being equal), we thought we could isolate it in two asset classes ie public equities and hedge funds.
Because there is attribution to one person, as opposed to the business we've previously been in where it has to do with more than just one person. (For example, is it the CEO, the investing team? Or did it have more to do with the year of the investment, the business cycle or the exit?)
So we saw that as much more difficult to isolate ‘The Female Factor’.
Whereas in these two asset classes, we thought, okay, we can isolate The Female Factor if we try. And that's where the idea for the WCEO ETF came from.
Question: …For the benefit of listeners who may not be familiar with what a Portfolio Manager does, for example in a hedge fund, can you talk briefly about what they do and why therefore you are able to isolate The Female Factor there?
Patricia Lizarraga’s answer..
So in hedge fund or in a (public equity) fund where there is a named Portfolio Manager, there is attribution for the financial results of that fund.
The investment returns of that fund are attributable to one person (or a small team). Therefore, all things being equal, one can isolate The Female Factor.
In hedge funds, all things being equal, we were primarily talking about strategy, right? Categorising the hedge funds into the strategies that are routinely considered different by investors.
And the way we isolated The Female Factor, in terms of size, is by making our indices equally weighted-so that's another step.
We said, okay, how can we measure The Female Factor? Well, let's make an index. Let's make indices that manage this over time, constantly measuring The Female Factor.
And therefore, since the vast majority, usually over 90 to 95% of the rest of the pool of potential assets in that asset class are led by men, then that isolates The Female Factor.
So what we did is we created indices.
***
Listen to the full interview on The Purse Podcast with Patricia Lizarraga about the launch of WCEO ETF.
News in Brief
Financial news
To put things into perspective: the start to the year has been one of the best on record for stock markets. Stoxx had best start since the index began in 1987, DB has calculated.
The FTSE 100 edged 0.2%+ higher as inflation ticked down to 10.5%, helped by a fall in energy prices, leaving investors hopeful of a slowdown in interest rate rises by the Bank of England (BoE).
Energy prices collapsed: European Gas Future now 84% below all-time-high (ATH). German 1 year ahead Power Price 85% below ATH.
China Vice-Premier Liu He at World Economic Forum (WEF): Confident China growth to most likely return to normal. Says housing sector is still a pillar of China's economy. Says real estate accounts for 60% of urban household assets.
Janet Yellen says US begins extraordinary measures to avoid debt default. With Federal government about to run up against debt limit, which Congress set at roughly $31.4tn in 2021, the Treasury Department has said it expects to start deploying so-called extraordinary measures.
While the Federal Reserve and the European Central Bank (ECB) have raised key interest rates sharply, the Bank of Japan (BOJ) is leaving its rates unchanged. This should also reduce the other central banks' appetite for further rate hikes.
ECB’s Christine Lagarde at World Economic Forum (WEF) ‘Stay the course’ is my mantra on monetary policy.
Google job cuts are not most important piece of news. Google calls in help from Larry Page and Sergey Brin for AI fight. Rival chatbot has shaken Google out of its routine, with founders who left 3yrs ago re-engaging: 20+ AI projects in works.
Inflation and macroeconomic volatility have displaced climate risks and inequality in the problem ranking (PwC CEO survey).
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin (BTC) $22,866 is in for a new ‘big rally’ as market strength copies conditions from after the 2018 bear market. (Briefly hits $23,000+).
According to the latest analysis, BTC/USD will continue to head higher “after some consolidation” thanks to key signals from its relative strength index (RSI).
Ethereum (ETH), is also experiencing a significant rise as. It has increased by roughly 14%+ to $1,660+, reaching a four-month high.
Cryptocurrencies like Binance's BNB, Polygon's MATIC and XRP also rose by 3.7%, 9.2% and 6.8%, respectively.
Shares of Coinbase rose by 13.3%, even as it was downgraded by Moody's, and MicroStrategy by 13.1%.
Genesis aims to move 'quickly and efficiently' to exit bankruptcy, interim CEO says.
Genesis bankruptcy unearths the Decentraland connection. Genesis released a list of the 50 largest non-insiders with unsecured claims against it. Among the 50 entities listed were companies connected to Decentraland co-founders Esteban Ordano and Ari Meilich, as well as CFO Santiago Esponda.
Nearly $700m of Bankman-Fried's assets seized by Feds. The cash and assets seized by prosecutors were primarily made up of Robinhood shares, court documents show.
The Purse Podcast
We cover the following in our conversation:
‘The Female Factor’: why invest?
The launch of the Hypatia Capital’s Women CEO ETF (WCEO)
How it came about and why invest in the ETF?
How women and men can align their values with investing?
Patricia shares her advice for women who are starting out on their investment journey
And we talk about how to close the gender investing gap.
Please enjoy! Listen on Apple Podcasts and Spotify+
Coffee Break? Read This
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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