Gender Lens Investing Uplifts Women and Boosts Returns

Today is Women’s Equality Day, a celebration of the progress made since American women won the proper to vote greater than a century ago. But within the fight for economic parity, there’s little to cheer for.

Despite efforts to treatment the income gap between the sexes, women still earn just 82 cents for each dollar earned by men, Pew Research shows. This disparity persists across education levels: Men without highschool diplomas make a median of $151 more per week than women without one, while men with advanced degrees earn $452 more per week than women with the identical level of education, in response to the U.S. Department of Labor Statistics (DOL).

It’s not all doom and gloom, nonetheless. In response to a Fidelity study, 60% of girls invested within the stock market in 2023, up from 44% in 2018. And more of them — plus many men — are using their financial prowess to uplift other women.

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Gender lens investing, because it’s called, goals to create a more equitable society by intentionally investing in causes, businesses and products that advance gender equality. It’s a method that commands a growing share of the stock market, and, in response to a mounting body of research, above-average returns.

More investors are incorporating gender lens investing into their portfolios in 2024 than ever before. Here’s the right way to join them.

Define your intent and do your due diligence

Gender lens investing is a flexible tool that might be implemented in a myriad of how.

For individual investors, one point of entry is thru mutual funds and ETFs like Natixis’ Mirova Women Leaders and Diversity Equity Fund, a world fund that invests in corporations that “contribute to the achievement of sustainable development goals with a give attention to gender diversity and girls empowerment.” BNY Mellon’s Women’s Opportunity ETF and State Street’s SPDR Gender Diversity ETF have similar objectives and have each outperformed the S&P 500’s 30-year average annual return (10%).

Last item, if you must really showcase the gender lens funds which might be performing the closest to the market, I’d go along with BKWO (up 17.10% this yr) and PWGIX (up 16.37% this yr).

You can too invest directly in corporations which have demonstrated a robust commitment to this cause. Bloomberg’s Gender Equality Index, for one, lists a whole lot of publicly-traded corporations — including tech giants like Accenture and Nvidia — committed to fostering hiring diversity, supporting female talent and addressing wage discrimination.

This, too, has the potential for excellent returns. In response to a recent Morgan Stanley study, corporations that prioritize gender diversity outperform their peers by a median of 1.2% annually. A separate 2017 study from McKinsey & Company found that corporations with gender-diverse executive teams were 21% more more likely to have above-average profitability.

Find options that align along with your values, and, as with all investment approach, research the potential risks of each.

If you may have a financial planner or advisor — or are considering getting one — they’ll enable you to incorporate gender-lens investment into your portfolio, discover suitable investments and choose how much of your holdings should go towards a gender-lens approach. Ellevest, a women-led robo advisor that enables clients to opt-in to gender lens automated investing, is a digital option value exploring.

Take a sustainable approach

You don’t should take an “all or nothing” approach to gender lens investing. Start small, by educating yourself on the challenges women face at work, of their communities and in the worldwide economy, and the way you may also help ease these burdens. Online directories like Buy From a Black Woman and Women Owned are great resources for supporting gender equality through your purchase decisions if a proper investment strategy isn’t feasible on your budget.

Whatever route you’re taking, gender lens investments ought to be a modest a part of your portfolio, even should you’re deeply committed to what they represent. When discussing your investments along with your financial advisor, be honest about your personal values. While gender lens funds can offer good returns, most of the top-performing ones are weighted towards big tech corporations. In case you’re seeking to support smaller, women-owned businesses, you would possibly must explore alternative investment strategies.

Still, given their potential to tackle the continuing economic challenges that girls encounter, gender lens investing deserves consideration in your portfolio. Not least on a day dedicated after we have a good time and promote the equality of girls.

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