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Why Gender Lens Investing Is Good For the World—And Your Portfolio

The movement toward greater gender equality is creating benefits at every level of society. And investors are taking note.

Woman looking at a cityscape

With GENDER EQUALITY AND DIVERSITY under increasing scrutiny today, a growing number of people are investigating how to create gender-related change through their investments. Many are turning to an approach called gender lens investing. Others may have heard about it but are unsure what it is and what potential investment advantages it might offer.

According to Jackie VanderBrug, Managing Director, Investment Strategist, U.S. Trust ,gender lens investing is the integration of gender into investment analysis, with two main goals in mind: to make the world a more equitable place and to make a profit. “It’s a way to leverage the market to support progress towards gender equality—In the workplace, the supply chain, the consumer market, and elsewhere,” she says. “And simultaneously it’s a way to identify areas of opportunity in the search for enhanced investment returns, sustainable growth and lower risk.”

Check out the video from the Economist Panel on Gender Lens Investing featuring Jackie VanderBrug.


RON CORDES: People aren't really informed as to what Gender Lens Investing is and so I think that they make assumptions, perhaps with very little information.

JACKIE VANDERBURG: Gender Lens Investing is not small, soft, and pink. It's that deliberate integration of gender-based data into financial analysis, with the expectation of finding additional opportunities and uncovering and mitigating risks.  

RON CORDES: People will say to me, well, gender lens investing, so that's this ETF.  Well, it's like saying impact investing, that's this microfinance fund. It’s part of it, but it is much broader.  

ERIKA KARP:  Diversity is painful.  It's messy, but it works.  And so within organizations, again when you go deep, the issue of women on boards, the number of women on executive teams, that’s critical and it's easy to count but it's not enough. 


The research is that 50% of women in America are not satisfied with their relationship with their advisor, and         50% of women in America would like to invest in gender         diverse companies…so the conversations that Erica is    having need to continue. But as more companies report gender diverse data, we can move beyond what she would say, counting women, to really understanding that DNA.  And the research is coming back strong again to embrace diversity of approaches here.

JACKIE VANDERBRUG: And then lastly, there's a lot going on in term of gendered data. So this is harder to get your hands around, but think about software.  Microsoft's got a whole lot of work going on around the gendered aspects of software development, and how to create software that doesn't have gendered biases. 

And there's lots of other work in that space, but those companies that are using gendered analysis in terms of data and products that then better work for all of us. It's not creating pink products, it's creating products that better work for everyone.  

RON CORDES: We have disproportionally had investments in women led companies in our private equity portfolio, not because they're women, but because they're totally brilliant, kick-ass CEOs.  They just happen to be women and what's interesting is to me it's a virtuous circle.  It's not about giving up return.  It's about putting ourselves in a position where we can outperform and invest in women at the same time.  

JACKIE VANDERBRUG:  I believe globally the economic power of women is growing faster than we as investors understand. Sixty-five countries in the last two years changed the legal status of rights for women in terms of their economic participation. All of that matters to companies that are operating around the world.  

  …so I would say is take one thing that you heard up here that fits with your particular situation, your passion, the way that you see the economy going, and decide to take a step.  And that could be a simple as starting to ask more questions in your due diligence, it could be asking your investment advisor how is it that my portfolio has exposure to the growing economic power of women.

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Headshot of Jackie VanderBrug

“We’re hearing more about gender lens investing today because there is a growing interest among consumers and investors to support gender equality as a fundamental human right.”

Jackie VanderBrug, Managing Director, Investment Strategist, U.S. Trust

It’s more than philanthropy

Perhaps it’s no surprise that some investors equate the idea of investing to improve society with philanthropy, which generally does not involve financial returns. So, when it comes gender and investing, it’s important to stress the “making a profit” side of the equation. Indeed, gender lens investing is considered to be a subset of impact investing, which itself is often described as “doing good while doing well.” That is, investing to make a positive social or environmental change while receiving a return on your investment.

Investors And Companies Are Responding 

“We’re hearing more about gender lens investing today because there is a growing interest among consumers and investors to support gender equality as a fundamental human right,” VanderBrug observes. This is reflected in increasing calls for equal pay for women, more diversity in upper management, the production of consumer products beneficial to women, and in other areas. And the investment industry and corporations alike are taking note of this burgeoning interest. Consider the following:

  • Gender lens mandate-focused assets under management, or AUM, have grown significantly; from September 2014 to June 2016 alone, they rose from $100 million to $560 million, an increase of close to 500%.1.
  • Gender lens investing affects the management of nearly $132 billion in money manager assets, and $397 billion in institutional investor assets.2
  • The proportion of companies reporting indicators on pay equity to RobecoSAM for the Dow Jones Sustainability Index rose from 21% to 31% between 2012 and 2016, and the proportion of companies reporting detailed breakdowns of their management level workforce grew from 29% to 44%. [See Exhibit 1]
  • Over a five-year period (2011-2016), U.S. companies that began the period with at least three women on the board experienced median gains in return on equity (ROE) of 10 percentage points and earnings per share (EPS) of 37%. (Three women is considered a “tipping point” of sorts in terms of improving performance.) Companies that began the period with no female directors experienced median changes of -1 percentage point in ROE and -8% in EPS over the study period.3
Graph of companies’ gender score performance relative to the market

This kind of gender-related data is important, VanderBrug says, “because it can help concerned investors identify companies that are making progress in these areas.”

Gender Diversity Yields Many Benefits 

Equally important, research indicates that a company’s gender diversity can be a fairly reliable indicator -- along with traditional metrics such as return on equity and debt free cash flow -- of its potential for investment outperformance relative to the broader market. Some studies suggest that strong performance may derive, for example, from better decision-making by a more diverse group of directors—including those that have a greater representation of women. Outperformance may also be tied to greater gender diversity among senior leadership and the rest of the workforce, which may in turn be correlated with reduced turnover and higher employee engagement. Leadership behaviors more often applied by women may reinforce a company’s organizational performance on several dimensions, and gender diverse teams may make better decisions.

Women & Education

Higher Education

Higher education is considered a gateway to advancement in the workplace. The underrepresentation of women in business particularly in the upper levels of management, points to notable waste of talent. As organizations do a better job incorporating women's skills, they stand to benefit from it the financial bottom line.

Science, Technology, Engineering and Mathematics (STEM)

Expanding the ranks of women in science, technology, engineering and mathematics (STEM) is particularly important, for the economy as well as for women themselves. According to "Women in STEM," a communication formerly available on "Supporting women STEM students and researchers is not only an essential part of America's strategy to out-innovate, out-educate, and out-build the rest of the world; it is also important to women themselves. Women in STEM jobs earn 33 percent more than those in non-STEM occupations and experience a smaller wage gap relative to men. Increasing opportunities for women in these fields is an important step towards realizing greater economic success and equality for women across the board."

According to a Pew Research Center Study and Census Bureau Data:

  • 55% of undergraduates enrolled at four-year colleges are women (as of 2014).
  • 37% of U.S. women ages 25 to 34 have at least a bachelor's degree, compared with 30% of men the same age range (2013).
  • 12% of U.S. women ages 25 to 34 have a master's, doctorate or professional degree, compared with 8% of men in the same age group (2012).

And with women making a clear majority of consumer decisions, companies are finally looking beyond “pink products” – the color is usually associated with support for breast cancer awareness but may also be used more broadly to show support for women -- to design items specifically for the female consumer. 

The Future of Gender Lens Investing 

Going forward, the quality and quantity of gender-related data and research should continue to expand, making it increasingly easier for investors to consider gender-related issues in making investment decisions. The use of gendered data promises advances in fields from life sciences to software, with innovations standing to benefit not just women but all consumers. Opportunity can also be found in investing in products that address global issues disproportionately affecting women such as maternal mortality, clean water, indoor air pollution, safety and human trafficking. Bottom line, investing with a gender lens can help scale up the companies that significantly improve the lives of women and girls. This type of progress is something VanderBrug is confident will continue. “No matter the political environment, we believe the issue of gender will only grow in importance--in the workforce, in the home and around the globe.”

How You Can Make a Difference

Consumers, corporations and investors seeking to support progress on gender-related issues can help effect change in a number of areas. 
Consumers, especially women, who control up to 80% of all consumer purchases, can choose to buy from companies owned by women or that are addressing gender issues. 
Corporations can be more inclusive in hiring, branding and product development, potentially improving their standing in the marketplace, especially among women consumers. A global consumer products company, for instance, recently announced it would drop sexist stereotypes from its advertising. 
Investors can analyze gender related data, pinpointing those companies that are making progress in this area and those that are not. They may also engage in gender analysis as a way to strengthen a portfolio, increase diversification and fine-tune risk. 

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