In the wake of #MeToo, and a stream of allegations of sexual misconduct against powerful men, more banks are encouraging clients to turn public awareness into proactive investment.
The latest trend in impact investing is “gender-lens” funds, which allow investors to put their money where their mouth is by supporting companies that champion gender equality.
UBS set up such an exchange-traded fund (ETF) this year, in conjunction with Equileap, an organisation that promotes equality-based investing.
The ETF invests in an index of 100 leading global companies, selected based on 19 diversity criteria, including equal compensation, work-life balance, transparency and accountability, gender balance, and sustainability policies.
Olga Miler, managing director at UBS Wealth Management, said the ETF was part of the UBS Unique project—a five-year plan at the bank to better serve female clients and improve the financial literacy of one million women.
“This ETF is another example of how we are doing that. Gender equality is important to our clients and our business,” Miler said.
UBS also donates 5% of the management fees received from the ETF to philanthropic projects supporting United Nation's Sustainable Development Goal 5: Achieving gender equality and empowering women and girls.
The US’s State Street Corporation is thought to be the first investment manager to set up a gender-focussed ETF, and its fund currently has $313 million under management. Societe Generale also offers a similar ETF, while Merrill Lynch’s Women and Girls lets women-focussed foundations the opportunity to align their portfolios with their missions and economic views.
UBS Wealth Management's chief investment office analysed profitability metrics for companies in the FTSE Developed World Index, finding that companies with women making up at least 20% of the board and senior management had higher returns than their less gender-diverse peers.
Rachel Whittaker, sustainable investing strategist for the office, said the research found diverse companies tend to outperform.
“We believe these findings support approaches to gender lens investing that take into account diversity at all levels of the organization as well as in leadership positions.”
The Global Impact Investing Network carried out a survey which found a fifth of respondents allocate capital to address gender equality. It estimated just under $1 billion were invested in public market gender lens strategies.
As well as creating impact, investors are waking up to the risks associated with investing in companies which fail to protect female employees. When US real estate magnate Steve Wynn was accused of sexual misconduct in February, stocks in his company fell 18%, while private companies like Uber and the Weinstein Company have suffered financially as a result of their sexist cultures.