{"id":28299,"date":"2020-04-13T13:50:12","date_gmt":"2020-04-13T17:50:12","guid":{"rendered":"https:\/\/test.greenmoney.com\/2025\/?p=28299"},"modified":"2020-05-04T13:48:06","modified_gmt":"2020-05-04T17:48:06","slug":"responsible-gender-lens-investing","status":"publish","type":"post","link":"https:\/\/test.greenmoney.com\/2025\/responsible-gender-lens-investing\/","title":{"rendered":"Responsible Gender Lens Investing"},"content":{"rendered":"
>> Back to April 15th Edition 2020<\/a><\/div>\n

Within a holistically-designed investment process, diversity of an Executive Team and Board of Directors is a powerful variable to analyze the stock\u2019s long-term capability of preserving and growing wealth for shareholders.<\/h3>\n

\"GreenAlphaAdvisors-logo\"My 22-year career in institutional investment management has been typical along several dimensions, including the fact that I have always been surrounded by older white men \u2013 in the office, boardroom, due diligence meetings, and at conferences. My experience reflects what Morningstar<\/a><\/strong> reports, \u201cin the U.S., women make up just 10% of fund managers.\u201d<\/p>\n

In every business setting, I am almost always the only woman in the room. No one has ever said that older white men are incapable of carrying out high quality investment management services; of course they are. But they\u2019re not the only ones with investment game, and evidence shows that diverse investment teams make better long-term decisions<\/a>.<\/strong> I\u2019m not so much arguing against the pale-male-stale investment managers as I am against their monopoly of the field. The 10% figure is no where near high enough.<\/p>\n

Lack of diversity of financial services professionals is finally<\/em> being talked about, but not sufficiently. It should be discussed more and in deeper ways, and – importantly – remediated in practice, because of the well-documented fact that heterogeneous teams outperform<\/a><\/strong> homogenous teams, across disciplines, and not by an insignificant amount.<\/p>\n

Setting the specific world of asset management aside for a moment and speaking generally, heterogeneous teams create fewer governance controversies<\/a>,<\/strong> they have higher rates of creating genuinely leapfrogging innovations<\/a><\/strong>, they are more customer-centric<\/a><\/strong>, they are more likely to capture new markets<\/a><\/strong>, and their sales growth rates<\/a><\/strong> are higher. In the case of asset management, they construct better portfolios<\/a><\/strong>.<\/p>\n

I suppose it is no surprise that an industry lacking in diversity itself has not yet mastered the art and science of managing gender-lens and other diversity-oriented investment portfolios; it can be hard to recognize virtues that one does not practice. It may not be surprising, but it is embarrassing. I\u2019m embarrassed on behalf of my financial professional brethren.<\/p>\n

Not that they have not tried; there are gender-focused investment portfolios out there, but many can be found wanting. The first thing that I find objectionable about most of the publicly-traded equity gender-lens portfolios is that they ignore anything and everything about a company, except for whether a woman can be counted on a management team and\/or Board of Directors (separately and collectively referred to as a \u2018leadership team\u2019 from here on).<\/p>\n

I cannot imagine an investment professional judging an investment process to be prudent if it solely evaluates the constituents of a leadership team, ignoring what the company produces, how fast it is growing, where it receives revenue from around the globe, what its uses of capital are, or any number of other variables.<\/h2>\n

And yet, many gender-lens portfolios are constructed by simply applying a screen to an index to count the number of women in leadership, removing those companies without any women, and investing in the remaining list of stocks. As if the presence of a female in leadership ranks alone constitutes an investable company.<\/p>\n

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