Women are gradually seeing more representation on corporate boards, which is helping boost the range of securities that gender-parity funds can choose from, according to a recent report from Parallelle Finance.
Currently, nearly 32% of board seats within the S&P 500 are occupied by women, up from 28% in 2020 and just 12% in 2000, the report noted. Similarly, the figures for companies in the Russell 1000 are at over 28% today, versus less than 24% in 2019.
Globally, the figures are also encouraging, at 33.5% of MSCI World board seats last year, up from just over 20% in 2017, according to Parallelle.
However, that trend has not been mirrored in the C-suite, with very few big companies being led by women. In the S&P 500, for example, only 32 companies have women CEOs, representing 6.4% of the index. For the wider range of executive roles, 18% of those in S&P 500 companies are held by women. Internationally, the figures are not better, with 5% of MSCI World companies having women CEOS, up from 4.2% in 2017.
Investing in line with women’s equality can give funds an edge over peer funds that don’t consider gender in their portfolio decisions, the research and consulting firm found.
“A range of studies spanning 15 years … have shown a connection between higher levels of women in leadership and higher return on equity, better profitability, lower incidences of fraud and better risk management,” the report noted.
As of the end of June, global assets in 36 “gender lens equity funds” tracked by the firm totaled $4.7bn, up 13% for the quarter, in part because it added four such funds to its coverage.
Among nine US equity funds that use a gender lens, all but one outperformed wider market indexes during the second quarter of the year. Similarly, more than half of global gender lens equity funds saw slightly stronger returns than wider market indexes, while a third of such funds trailed in performance.
The UBS Global Gender Equality UCITS ETF, for example, returned -13.8% during the second quarter. The S&P 500, by comparison, saw returns of -16.1%.
Meanwhile, the Pax Ellevate Global Women’s Leadership Fund had net returns for investor-class shares of -15.5% during the second quarter, compared with -16.2% for the MSCI World Index.
Outperformance did not hold over 12 months at the end of June, however. The UBS Global Gender Equality UCITS ETF returned -14.9%, compared with a net of -11% for the S&P 500, according to the report. Similarly, the Pax Ellevate Global Women’s Leadership Fund returned -18.5% over 12 months at the end of June, compared with -14.3% for the MSCI World Index.