Global financial institutions are increasingly developing and offering funds that invest in women as they compete for the female dollar.
Sallie Krawcheck the chief executive and founder of US-based digital investment firm Ellevest is once again rolling out more funds that allow people to invest in women and the businesses that support them.
It’s part of a growing trend that’s happening in many developed financial markets as institutions realise that there is a growing appetite for socially responsible investments and investments that actually appeal to women.
In plain speak: women want to invest in firms that support women. It’s an easy concept to understand and it means something for female equality and leadership progress.
Unfortunately the new funds offered by Ellevest are only available to US clients. So where does that leave Australian women?
Australian firms are yet to offer the same level of female focused investment options. However I expect this will soon change, especially as funds like Ellevest attract attention.
We are already seeing many investment firms factor gender diversity into their fund investment criteria.
Exchange Trader Funds provider BetaShares offers Australian investors the ability to access its FAIR fund which has board diversity screening as one of its criteria.
The challenge now is to tweak this further so that women can directly invest in funds that support women in leadership.
A game changer would be if superannuation funds started to offer investment options that allowed people to invest in companies that directly supported women, either through gender diversity or financial products.
Interestingly new research by Rainmaker already shows that superannuation funds with 30 per cent of women in leadership outperformed male-dominated funds by $7 billion over three years.
According to a CNBC news report, Ellevest will launch five new funds as part of the Ellevest Impact Portfolios. It follows last year’s release of a series of exchange-traded funds designed for women to save for retirement.
The report said that investments in the new funds could include small business loans to women business owners or sustainable housing for workforce tenants and families.
Despite the funds management industry in Australia, and the United States, being dominated by men, new research has found that female led funds tend to perform a little better in more conservative structured funds.
According to Morningstar’s research on fund managers by gender, female fixed-income managers (that is generally cash-type products) outperformed, producing returns that were on average 0.09 per cent higher annually than those produced by men.
Women who run equity funds (generally funds with shares or ETFs) underperformed men on average by a 0.05 per cent margin annually.
According to financial services giant Fidelity Investments, women are also considered to be better at investing than men.
Fidelity looked at eight million investment accounts and found that women’s investments earned 0.4 per cent more each year on average, women also save more each year as well.