Gender Smart | October 3, 2018

Investments products that benefit women are proliferating across asset classes

Dennis Price
ImpactAlpha Editor

Dennis Price

Gender-lens investors that seek to invest in women-led companies or improve the lives of women and girls have a growing choice of fixed-income and equity strategies in private and public markets.

Take fixed income. South Florida-headquartered Community Capital Management, which manages more than $2 billion through its flagship CRA Qualified Investment Fund, says it is finding fixed-income gender-lens opportunities in mortgage-backed securities, taxable municipals, and asset-backed securities. 

On behalf of the Congregation of the Sisters of St. Joseph, CCM invested in a mortgage-backed security comprised of loans to low- and moderate-income minority women in the U.S. For the Cordes Foundation, CCM found a taxable municipal bond that financed a science and technology center and student union at Texas Woman’s University. 

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“For gender-smart investors there are now opportunities across asset classes and this is a great example, especially in products and services which benefit women,” says Susan Biegel, a gender-lens investing pioneer who is producing the first Gender-Smart Investing Summit in London next month. 

The growth market in women’s equality

Others gender-lens investors are finding success with fixed income products. Calvert Impact Capital’s Women Investing in Women initiative, for example, raises capital through its community investment note and has helped nearly a million women in off-grid communities gain access to energy by lending to companies boosting the distribution of clean energy technologies.

Root Capital’s Women in Agriculture Initiative, which raises capital through a loan fund, reached 223,000 women producers in the first half 2018 by lending to 183 agricultural businesses in Africa, Latin America, and Southeast Asia.

Last year Biegel, along with Veris Wealth Partners, rounded up two-dozen public gender-lens investment vehicles that hold more than $910 million in assets. A separate list identified by Beigel and Wharton Social Impact initiative found 58 venture capital funds with $1.3 billion in assets that are betting on women.

Together, the tally of public and private, fixed income and equity assets invested with a gender lens tops $2.2 billion. The opportunity: Achieving gender parity could add by $28 trillion to the global economy by 2025.

New opportunities

A strategic “lens” can help investors see something others don’t.

“An institutional investor who looks at strategies through a ‘gender lens’ may see excellent opportunities they may have otherwise missed,” says Cambridge Associates’ Deborah Christie, “opportunities to both make an impact that aligns with their mission and to benefit from investment diversification.”

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Christie is the co-author of a new Cambridge report that makes the case that a portfolio approach to gender-lens investing is not only possible, but may give investors an edge.

Women, for example, hold only 16% of board seats and 4.4% of CEO roles at Russell 3000 companies. Yet in the next few years, women are likely to control $72 trillion in assets, or 32% of global wealth.

Research is mounting to demonstrate the “impact alpha” in “gender lens” investing. Companies with women in at least half of leadership positions deliver higher sales growth, earnings per share growth and return on assets. Higher gender diversity at companies reduces stock price volatility.

Startups founded by women generate more revenues than those founded by men, while VC returns improve as the ratio of investments in women-led firms rises.

Female investors also seem to outperform. Portfolio churn rates of female fund managers are lower, boosting net returns. Female hedge fund managers have outperformed a general sample over 10 years.

The “gender equity” opportunity is increasingly clear. Investment products across asset classes are proliferating and the performance track record is getting longer. Excuses not to invest in women are vanishing.