female investors

Female investors deserve better financial products

Female investors in Australia are missing out compared to US women when it comes to investment choices that support the advancement of women.

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Female investors are growing in number, but does a male dominated finance industry know how to deal with it?

Many locally-based financial services firms that I speak to are working through how they can appeal to more women on everything from women’s financial advice teams, marketing material to investment products, and indeed whether the interest level is really there.

But the real issue is engagement. This is an industry challenge.

Various studies show that most Australians with superannuation funds aren’t that interested in going beyond the default investment choice. And as one fund manager said to me, why would they invest in women for women’s sake?

Well, there’s a bit more to it. To some extent, engagement requires a new way of thinking for a mostly male dominated finance industry.

When it comes to women, engagement is more likely to be effective by tapping into a socially responsible call to action.

For my money, if there were a local fund, either inside or out of superannuation, that allowed me to invest in the advancement of women, be that through the companies that had the most gender diverse boards or balance of women in senior leadership, then most likely I’d be buying.

Some of my friends detest the idea of a female-focused fund, and thankfully they have more than enough products to choose from. But even they recognise that if such a fund boosted engagement among women obtaining advice or in building wealth, then this could be a good thing.

Providers of ethical investing products insist that women are more likely than men to opt for products, particularly funds, that are designed around socially responsible or positive impact factors.

Of course, it’s not just women that are interested in socially responsible female-focused financial products, it’s men, retirees and young people as well.

In recent years, a range of financial products have emerged in the Australian market from those applying a gender lens to those that prioritise gender diversity.

We’ve also seen insurance and superannuation funds target women with added advice and education services for women.

Numerous financial services behemoths, including Australian Super have flexed their shareholder voting muscles to pressure companies on gender diversity, particularly on boards.

But to date, we haven’t seen any Australian funds tap into that rising empowerment theme that in 2017 saw women become increasingly more vocal on matters of equality.

In the United States it’s a different story.

State Street Global Advisors has its Exchange Traded Fund (ETF) SHE, which is one of the few funds with a socially responsible female thematic.

SHE underperformed the benchmark Morningstar Large Blend Index in 2017 with a total return of 19.68 per cent compared to 20.44 per cent.

One of the closest options to SHE is the BetaShares Australian Ethical ETF (FAIR) fund, which invests only in companies that have at least one female board director.

FAIR has outperformed the benchmark S&P/ASX 200 over the past three years with a 7.9 per cent total return versus 3.8 per cent.

I asked BetaShares if it would consider going a step further and develop an ETF that features companies where there are at least two women on boards, or perhaps 30 per cent women in leadership and board positions.

BetaShares isn’t ruling out such a move but says it all depends on whether applying such a screen results in a portfolio that is robust and also whether there exists sufficient demand in the marketplace for such a product from a wide variety of investors.

I also asked AustralianSuper if it would consider offering a similar product, but it said it has no plans to do so.

The step might not be a difficult one to make given the increasing number of Australian companies improving their gender diversity policies.

Currently most of the companies in the ASX top 20, have over 30 per cent women in board positions, according to the Financy Women’s Index for the December quarter.

There’s no question that we have an evolving industry, which appears to be moving in the right direction on gender diversity. But we are missing an opportunity to engage with a wave of potential female investors, especially those who want to invest in women for the social good it can create.

This article is a trimmed version of one I recently wrote for Fairfax Media.

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