Welcome to our #115 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on gender lens investing and the gender lens scorecard, a tool for appraising investment funds and portfolios.
We interviewed Marypat Smucker, who is Co-Founder and Principal at Parallelle Finance, a gender lens investment research firm founded in 2019. And we share highlights from The Purse Podcast interview.
There are many data points around the persistent gender gaps in companies, sectors and in the global economy as a whole.
At the same time, research has demonstrated the many benefits associated with higher levels of gender diversity in corporate leadership.
Investors committed to sustainable investing should be seeking to capture the performance and other benefits of the gender lens approach.
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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 investing: the gender lens scorecard
Parallelle Finance have launched the gender lens scorecard-a tool for appraising investment funds and portfolios.
Key market data points:
AUM in gender lens equity funds grew 51% in 2021 to $4bn.
AUM in gender lens fixed income grew 75% in 2021 to 8.5bn.
There are 27 gender lens equity funds in the Parallelle Finance coverage universe. These are characterised by investment criteria around women-in-leadership and related corporate gender equality metrics.
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We interviewed Marypat Smucker, Co-founder and Principal of Parallelle Finance about gender lens investing and the Parallelle Finance Gender Lens Scorecard.
Here are key highlights from the interview on The Purse Podcast:
Why do we need to apply a gender lens to investing?
The global gender gap is a key imbalance affecting all economies.
There are many data points around the persistent gender gaps in companies, sectors and in the global economy as a whole.
The World Economic Forum’s latest estimated time frame for closing the biggest gender gaps at the current pace of progress is still over 100 years.
At the same time, research has demonstrated many benefits associated with higher levels of gender diversity in corporate leadership.
These benefits include:
superior performance
better operational metrics
improved risk and fraud management
improve decision-making (and many other areas).
In fact, a recent MSCI report found that gender diverse companies had better records on reducing carbon emissions.
Corporate gender equality is an important element to closing those deep gender gaps in the global economy.
Investors committed to sustainable investing should be seeking to capture the performance and other benefits of the gender lens approach.
To date the available data on diversity in corporate leadership has been gender data, and now the research is starting to make a very welcome push around data on gender plus racial, ethnic, and all diversity metrics for a range of corporate measures.
Brief market overview: why is this a growth area?
There are several dynamics driving continued long-term growth.
The first of these is that gender lens is a thematic ESG strategy. And ESG has been seeing very strong AUM. This is a growth driver for gender lens as a thematic strategy.
There is also growing investor awareness of the importance of diversity, equity and inclusion in public companies. There are growing demands around this which is seen in an increasing number of shareholder proposals on diversity and equality issues.
Also, there is a unique growth and long term performance opportunity for gender lens funds.
But despite the proven benefits of gender diverse leadership, we all know that growth in these metrics has been painfully slow.
For example, Deloitte recently estimated that it will take until 2045 to achieve global board gender parity. And this is the area of corporate equality which has actually seen the best growth over the last 10 years.
C-suite female representation is lagging far behind still, and this is why gender pay gaps persist in most countries and most sectors.
Many gender lens funds were launched within the last five years when women in corporate leadership numbers were even lower than they are today.
However, with increased pressure and attention driving progress, gender lens funds are uniquely well positioned to capture for investors the benefits of growth in diverse leadership, diverse workforce and growth in pay parity.
All of these metrics still have a long way to go. But we are seeing steady launches of new gender lens funds, and we believe that this real growth opportunity is represented by the corporate gender gaps that remain, and that are being increasingly spotlighted and addressed.
The gender lens scorecard: what is it and why introduce this in the market?
It is important to note that all of these funds are investing with a gender lens.
We define gender lens equity funds as those with stated investment criteria around investing in companies with strength in gender metrics.
All of the funds in the gender lens universe have investment criteria around women in leadership. And most also have additional criteria around other metrics, including workforce equality, pay equity, and also work for spend effects and policies. So with the scorecard.
The aim to help investment advisors place their clients in gender lens funds, and to assist advisors and investors to evaluate and understand these funds.
They are all investing with a gender lens and we believe it is time for a deeper evaluation of this suite of funds.
So if an investor goes to her advisor, for example, and asks about gender lens vehicles, we want to be the resource for finding the investment vehicle that fits her portfolio.
And we especially want investors of all sizes to be able to invest with a gender lens.
The tool applies five grade levels to four categories, each comprised of scores from sub-categories and indicators.
Taken together, the categories assess both the fund and the asset management firm on gender equality in investment criteria, holdings, portfolio management team, and firm-wide leadership, as well as the fund's performance and overall ESG approach.
The catgeories are as follows:
Category 1: Fund gender metrics
Gender lens investment criteria
Women in leadership and workforce metrics of holdings
Representation of women on portfolio management team
Category 2: Firm gender metrics
Women in leadership metrics
Firm public commitments to equality
Advocacy for gender equality and diversity
Category 3: Fund performance
Internal rating of fund performance vs. gender lens indexes and broad market indexes
Third-party ratings of fund risk-adjusted performance
Category 4: Fund ESG
Aggregation of leading ESG scores
Can you apply this tool to VC firms & VC funds?
Yes-the tool can be applied to private equity and VC firms and their portfolio.
Because of our detailed approach to a range of indicators and metrics and a combination of quantitative and qualitative measures for our categories and subcategories, the tool can be modified to score the gender lens intentionality (or not) and results (or not) of portfolio companies of a VC or private equity firm.
There are persistent gender gaps in VC and private equity, investment teams and deep gaps where these teams are directing their investment capital.
So this is definitely an area where firms could receive a score from us if they want to demonstrate their strength in this area.
What do you hope to achieve with the gender lens scorecard?
We hope to promote more capital being directed into gender lens vehicles from investors of all sizes, through all of our work. And we hope to promote and support more capital into gender lens investing.
Our overall goal with the tool is really to provide investors with comprehensive data to understand gender lens portfolios.
And we will also move into helping people understand other portfolios through a gender lens.
We very much hope to serve the investment advisor community and the tool will be available for providers of all types of gender lens portfolios.
What next? (Re) Listen to:
The Purse Podcast interview with Angela Atherton about gender lens equity investing and women in leadership
News in Brief
Financial news
The Nasdaq 100 gained 3.7% on Friday, which was the best day since March but not enough to avert weekly loss of 2.4%. This week shares fell, which were extremely popular with investors until recently, such as Apple, AirBnB. Are we at peak fear?
On Friday, the S&P 500 climbed 2.4% after the benchmark index flirted with a bear market. Friday's gain wasn't nearly enough to keep the market from its 6th straight weekly drop, the longest such streak since 2011.
US inflation hit 8.3% YoY vs 8.1% expected but slowed from previous month's 4-decade high. Removing volatile food and energy prices, so-called core CPI still rose 6.2%, against expectations for a 6% gain.
The UK economy contracted by 0.1% in March after flatlining in February. Pressure is mounting on the government to deliver an emergency summer mini-budget after recession fears have been heightened.
UK inflation ‘could last for years not months’, warns economist Michael Saunders, a member of the Bank of England’s rate-setting monetary policy committee (MPC). Inflation could rise to 10%+ and it might take 2-3 years to reduce to 2%.
Twitter plunges up to 24% as Elon Musk tweeted that Twitter deal is temporarily on hold as he examined number of spam accounts on site. Musk has been seeking Twitter investors as Tesla sheds $400bn in value. Musks added later: “Still committed to acquisition.”
Crypto: bitcoin, ethereum, DeFi & NFTs
This has been a difficult week for the crypto community and investors. The entire crypto market crashed after UST stablecoin depegged (from the US dollar) and the Luna cryptocurrency fell to a fraction of a penny (from $85 a week ago, with a market cap of $28bn a week ago to $1.5bn today). Bitcoin and ether are both down over 30% week-over-week, hitting lows not seen since 2020, and altcoins like solana, dogecoin and cardano are faring even worse. (See the current price of bitcoin and ether).
Thursday, May 12, 2022, was one of the most exciting and active days in the bitcoin/crypto market in months, with no shortage of volatility and fear from market participants. And there has been a mjor increase in bitcoin volume trading as investors buy the dip (US).
The Luna cryptocurrency collapsed this week after the stablecoin UST depegged from the US dollar. Some have speculated that an attacker attempted to break UST in order to profit from shorting bitcoin. However the responsibility is on crypto developers to build a more stable system.
Terra co-creator Do Kwon has proposed a plan on Friday to revive the network after its collapse. And it doesn't involve UST stablecoin.
Crypto market downturn leads to steep drop in blue-chip ethereum NFTs. Blue-chip projects, such as Bored Ape Yacht Club (BAYC) and CryptoPunks, have been no exception. Trading of Bored Ape Yacht Club collectibles on OpenSea fell to its lowest point in the past month, down 63% on May 12 over a seven-day period.
The Purse Podcast
We cover the following in our conversation:
gender lens investing
the gender len scorecard: what is it?
how investors might use this tool, including VCs
and more
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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