In a recent client meeting, financial advisor Stephen Rischall got asked about how to invest in companies that support gender equality and women’s issues in the workplace.
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Think of it as a #MeToo moment.
“The client said that because of the attention on the #MeToo movement and the power behind it, he wanted to invest,” said Rischall, a certified financial planner and founder of 1080 Financial Group in Sherman Oaks, California.
“It was both about the potential return and the social impact,” Rischall said. “The client feels like there’s a correlation between the two, and he and his wife wanted to take a piece of their portfolio to invest more in line with their values.”
While investing in companies based on their treatment of women is not new — the first so-called gender-lens fund appeared in the 1990s — the current spotlight on women in the workplace and equality has spurred renewed interest from retail investors. Options for putting that money to work have simultaneously expanded.
Since November — right after the #MeToo movement had gained traction — 12 new funds have emerged that zero in on women’s issues, adding to the 22 already existing, according to research from Veris Wealth Partners and consulting company Catalyst At Large.
That’s on top of dozens of other options — mutual funds and exchange traded funds — whose investments are made at least partly based on things like the presence of women in executive-level positions at the companies, including on their board of directors.
“In the last six months or so we definitely had an uptick in people asking if there’s a way they can invest more in companies that focus on female leadership and governance,” Rischall said. “We used to have younger people interested and asking about socially conscious investing, and now we’ve been seeing it come from both younger and older clients.”
While data focusing on investment funds that specifically screen companies for women’s issues is hard to come by, $114 billion is considered a “reasonable floor” of the global amount in so-called social-impact investing, according to a 2017 study by the Global Impact Investing Network. That category includes funds focusing on women’s issues.
Separate data from Morningstar shows $98 billion is held in such assets in the United States.
While it represents just a fraction of the trillions in invested assets globally — the market cap of the U.S. stock market alone is in the neighborhood of $24 trillion — the slice represents investors’ growing interest in investments whose goal is to better the environment and society without giving up market returns.
At Nia Capital Management in Oakland, California, the firm’s $13 million Global Solutions Equity Portfolio — which includes a strong gender-lens strategy — returned 37.59 percent last year. That compares with a 21.82 percent return for the Standard & Poor’s 500 index.
“As these funds continue outperforming, they’ll gain momentum,” said Kristin Hull, founder and CEO of Nia, which launched the fund in December 2015.
In the Global Impact Investing Network’s survey, investment professionals — i.e., fund managers, foundations, banks — reported that their social-impact investments have either met or exceeded their expectations for both impact (98 percent) and financial performance (91 percent).
At Calvert Investments in Bethesda, Maryland, where impact investors hold $11.6 billion across 27 funds, the increased focus on women in the workplace brought about by the #MeToo movement is welcome.
“This has been a longtime priority for us, making sure we can engage with companies about how they manage their workforces and diversity in general,” said Erica Lasdon, senior environmental, social and governance research analyst at Calvert.
“Hopefully [the current focus] will add some momentum so that as investors, we can see more companies act on things we’ve been hoping for, for a long time,” Lasdon said.
In 2016, less than half (47 percent) of companies in the S&P 100 had at least 25 percent women on their boards, according to Calvert.
If you’re among the investors who want to put your money where your values are, be sure to do research on any fund you’re considering, just as you would for any investment. That is, consider the cost, the fund’s strategy and how it fits into your overall portfolio.
“You can seek to add to specific investments in companies you want to support, but don’t let that get in the way of designing a well-diversified portfolio,” Rischall said.
His firm tends not to put more than 10 percent of a client’s portfolio into any one sector or investing theme.
“Gender diversity could be considered a theme,” Rischall said. “If you have more risk tolerance, you could have a more concentrated position in it as long as you’re okay with it giving your portfolio more risk.”