Some high-profile gender equality funds get low scores…for gender equality



Fearless Girl has some explaining to do.  

State Street Global Advisors installed the statue of a defiant girl standing her ground in front of Wall Street’s Charging Bull last year in part to market its SHE exchange-traded fund. The statue’s original plaque (later removed) read: “Know the power of women in leadership. SHE makes a difference.”

Now, an online tool that helps investors assess the portfolios of exchange-traded and mutual fund rates State Street’s SHE ETF as mediocre at best across a dozen indicators of gender diversity and gender balance. Another high-profile gender-lens mutual fund, Glenmede’s Women in Leadership U.S. Equity Portfolio, also got low marks for gender balance and overall.

The shareholder advocacy group As You Sow released the free tool, Gender Equality Funds, to help individual and institutional investors apply a gender lens to the often-opaque funds that are the mainstays of most retirement and other accounts. As You Sow, based in Oakland, Calif.,  has released similar tools for Fossil Free Funds, Deforestation Free Funds, Tobacco Free Funds, and Weapon Free Funds. As You Sow is hosting a webinar on the new tool today at noon ET (register).

The gender equality tool uses ratings on 4,000 companies compiled by Equileap, headquartered in Amsterdam and London, that are based on a dozen indicators that measure  commitment to gender diversity and gender balance in companies’ leadership, management, and workforce. As You Sow applies the company ratings to the 5,000 or so funds tracked by Morningstar to generate a gender equality portfolio score for each fund.

Nearly three dozen publicly traded gender-lens securities now hold $2.4 billion in investor capital, up 85% over last year, according to a recent report by Veris Wealth Partners’ on public gender-lens investment products.

Total assets in public and private gender-lens products double to $4.65 billion

State Street Global Advisor’s SHE ETF (officially called the SPDR SSGA Gender Diversity Index ETF) scored only 47 points out of 100, and only 38 out of 100 for gender balance. The fund was ranked number 222 out of 540 peer funds comprised of large-cap companies. Some other State Street funds not specifically marketed as gender-lens portfolios scored as high as 61 out of 100. 

The SHE ETF, one of the earliest public gender-lens portfolios, was originally seeded with $250 million from the California State Teachers’ Retirement System, or CalSTRS. It has $353.2 million in assets, according to the As You Sow tool.

Glenmede’s Women in Leadership U.S. Equity Portfolio, scored 45 points out of 100 overall and only 35 out of 100 points for gender balance score. In its “Large Value” peer category, it ranked No. 288 out of 421 funds.

“We’re going to have conversations with them,” As You Sow’s Andrew Behar told ImpactAlpha. “We want to understand how they’re picking their funds and what the methodology is. I want to talk to the fund managers.”

Behar cautioned that the rankings may be distorted by incomplete data. For example, some portfolio companies may have failed to respond to Equileap’s survey questions. Behar said that such data sets tend to get better over time, and that fund scores improve as managers shed low-performing companies — exactly the result that As You Sow is hoping to spur.

“It’s the nature of a scorecard that you have to put an asterisk on it,” he said. “This is going to be a wake up call.”

Some other gender-lens funds scored significantly better. The Pax Ellevate Global Women’s Leadership Fund (PXWIX) scored 59 out of 100 points overall and ranked No. 3 among 264 World Large Stock funds, better than 99% of other funds in the category. Impact Shares’ YWCA Women’s Empowerment ETF (WOMN) scored 58 out of 100 overall points for policies promoting gender balance and gender equality.

A strategy for unlocking an investment’s full gender – and financial – potential

Julie Gorte, senior vice president of sustainable investing for Pax World Funds said the tool highlights “that some funds do a lot better than others when it comes to gender and it pays to look.” She cautioned that there are significant gaps in the data. “There is a lot of room for companies to report” more, she said.

In particular, the As You Sow rankings don’t reflect funds’ shareholder engagement activities, such as voting against all-male boards of directors, as Pax World does, Gorte said. State Street, with nearly $2.8 trillion in total assets under management, said in September that it has voted against more than 500 chairs of nominating committees on boards without women in each of the last two proxy seasons.

Peter J. Zuleba, III, president of Glenmede Investment Management said Glenmede was likewise disappointed that the rankings overlook proxy voting, where the firm has a custom policy. “When looking at the percent of our holdings relative to the Russell 1000, we own 1.6 times more stocks with a female CEO or chair, 1.5 times more stocks with at least 25% female representation in management, and 1.3 times more stocks with at least 25% women on the board,” Zuleba said in an email exchange.

“We believe the main driver of our below-average rankings is that our approach is sector-relative,” State Street’s Jennifer Bender told ImpactAlpha in an email exchange. “We are targeting companies that promote women into senior leadership roles and put women on boards relative to their sectors.”

State Street’s index was built to track the universe of large U.S. stocks in a way that would be reasonable for institutional investors, she said, and to reward companies, rather than sectors, for their efforts. “One could argue that the reason we have lower gender criteria than other products is because we have made a conscious decision to make the product more investable and fit for purpose in institutional portfolios and because we believe in not penalizing certain sectors,” Bender said.  (Editor’s note: this post has been updated post-publication.) 

“We are honored and encouraged that the YWCA’s WOMN ETF scores so highly,” Impact Shares’ Ethan Powell told ImpactAlpha. “We are excited to see more tools developed by experienced and talented financial professionals to help the investing public better understand how their capital is allocated relative to important social issues.”

The Tara Health Foundation supported the development of both the As You Sow tool and the Equileap database.” If we want to democratize access to impact investing, we need to create tools for everyone, from individuals with 401(k)s to institutional investors with billions of dollars under management,” Ruth Shaber, the foundation’s president, said in a statement. “The Gender Equality Funds tool allows anyone to apply a gender lens to their investments.”


ImpactAlpha’s Jessica Pothering and Roodgally Senatus contributed reporting.

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