Despite research that links gender diversity at the top with stronger corporate performance, ThirtyNorth Investments saw few investment options that leverage this research. So, just over a year ago, the majority-women-owned firm launched its Women Impact Strategy Separately Managed Account.
The strategy focuses on the financial benefits of investing in those companies that have the highest percentage of women on their boards of directors and in their C-suite.
Portfolio managers Suzanne Mestayer, managing principal, and Blair duQuesnay, principal and chief investment officer, stopped by ThinkAdvisor's New York office to discuss why it launched its Women Impact Strategy one year ago.
"The national conversation around women seems very prevalent … but what we're not seeing is this attention on the investment thesis as much," duQuesnay said. "Which I think is very compelling. Not only is it wonderful to bring attention to the accomplishments of women, but also that there may be an ability to earn financial return in addition to aligning investments with the value."
Since the Women Impact Strategy's inception on April 7, 2016, it has consistently outperformed the Russell 3000 Index net of fees. On its one-year anniversary, the Women Impact Strategy's outperformance over its benchmark was about 3.5%.
"Normally as investment advisors we say, 'One year is not a long time, you've got to give it more time,' but we were very pleased to see that happen the first year," duQuesnay added.
The strategy starts with a universe of more than 500 global companies previously identified as leaders in gender diversity. From there, a rigorous screening process is applied that considers economic performance indicators based on size, value and profitability. Then, a gender lens screen is applied that seeks out companies with boards that are at least 20% women and that have at least one woman in the C-suite. The companies are then balanced and ranked by sector, and the top 50 are chosen for the portfolio.
This process happens once a year, duQuesnay said.
In their portfolio, the average percentage of women on boards is 30.6% and in the C-suite is more than 20%.
"Globally the percentage of women on boards are hovering right under 15%," Mestayer said. "And in the U.S. it's a little higher but it's not 20%."
DuQuesnay is hopeful that their strategy's minimum of 20% as its gender lens criteria will go up as more and more companies add women to leadership positions.
