Female investors want more than pink washing products
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Female investors want more than pink washing products

Women are trending, and the world of finance smells an opportunity. But Australia is at risk of missing out.

In many countries, the value of private wealth held by women is growing and female investors are becoming more active.

As women manage more money, there are more products targetting them.

As women manage more money, there are more products targetting them.

Photo: Jessica Shapiro

In the United States, between 2010 and 2015, women’s wealth grew from $US34 trillion ($A43 trillion) to $US51 trillion, according to the Boston Consulting Group.

This has given rise to a number of fund managers and product providers targeting women through their service offering.

In Australia, although women’s wealth is rising due to increased workforce participation, and inheritance as women tend to outlive men, product innovation has been slow.

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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.

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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.

Many people want to see their money do good in the world.

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.

Many people want to see their money do good in the world, they want to know that post the global financial crisis (GFC) exactly where their money is going and what impact it is having.

The challenge for the finance sector is to employ more women into the influencing ranks of funds management and financial advice, and also to reorient from the typical customer of old to a customer with a new view of the world.

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.

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The #MeToo campaigns now extend beyond sexual harassment and violence, into an empowerment movement that’s spreading across all sectors, including finance.

Such movements create opportunity for fund managers and product designers to offer socially responsible impact investments to investors.

We’re seeing this in the US, which arguably has much deeper and more liquid financial markets.

State Street Global Advisors is one of the world’s leading asset managers and it has strategically positioned itself as both a gender diversity activist and a major go-to financial services firm for women.

Last year, its Fearless Girl statue claimed headlines for starring down Wall Streets famous Raging Bull.

State Street's fearless girl statue on Wall St.

State Street's fearless girl statue on Wall St.

Photo: AP

The stunt helped draw attention to its Exchange Traded Fund (ETF) SHE, which is one of the few funds with a socially responsible female thematic.

SHE, now two years old, is designed to invest in companies that employ women in high-level leadership roles.

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.

Companies ranking in the top 10 per cent in each sector are included in the portfolio, so long as each firm has at least one woman on its board or as chief executive.

Another fund focused on women is the Pax Ellevate Global Women’s Leadership Fund (PXWEX), now part of Impax Asset Management.

In 2017 the fund outperformed the benchmark MSCI World (Net) Index with a 22.78 per cent total return compared to 22.40 per cent.

This fund invests in the highest-rated companies in the world for advancing women through gender diversity on their boards and in executive management.

In both performance calculations outperformance is likely to be reduced by fees. The women-focused investment company founded by Wall Street veteran Sallie Krawcheck, Ellevest, also includes both the SHE Index and PaxEllevate in the mix of investment options offered to customers.

Ellevest is focused on bridging the gender pay gap and recently launched the Ellevest Impact Portfolios, with five new funds that have an investment theme of advancing women globally. The new portfolios are in addition to its existing ETF Portfolios.

Sallie Krawcheck, co-founder and chief executive officer of Ellevest Financial.

Sallie Krawcheck, co-founder and chief executive officer of Ellevest Financial.

Photo: Bloomberg

Unfortunately, Ellevest currently serves the investing needs of US clients only.

So what’s holding Australia back? Performance, cost or demand? It’s likely to be a bit of everything.

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.

The latest gender diversity report by the Australian Institute of Company Directors (AICD) also shows that of the ASX top 200, there are 74 companies, which have reached or exceeded a key 30 per cent target. A milestone the AICD is pressing listed companies to meet by the end of this year.

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.

Bianca Hartge-Hazelman writes on women’s money issues and is the founder of the Women’s Index.