Gender lens investing on the rise among institutional investors

In recent years, investing with a gender lens has become far more popular among institutional investors.

“Part of it is awareness and part of it is some of the performance,” said Jackie VanderBrug, managing director and head of sustainable and impact investment strategy at Bank of America Corp., during a webinar hosted by the Forum for Sustainable and Responsible Investment’s U.S. SIF Foundation.

“It used to be if you said to someone, ‘I’m interested in a gender lens,’ they would say to you, ‘You can’t do that, but if you did you would lose money and even if you lost money it wouldn’t matter.’ Now lots of folks have proven that you can do that, that it is an investable approach and in fact it is not . . . a way to ethically lose money.”

Read: How investors are turning the gender diversity dial on corporate boards

Indeed, the number of specific investment products available that feature a gender lens is accelerating rapidly, said Meg Voorhes, director of research at the U.S. SIF Foundation, also speaking during the webinar. The amount of global assets under management that are being managed with an eye towards gender-specific issues is also on the rise.

“Generally, when we speak to gender lens investments, we’re talking about investments or products that have a specific theme of women’s socio-economic advancement,” she said. “These products consider standard financial metrics, but also criteria in the investment process, with the goal of improving gender equality. So these criteria may include women’s access to capital, inclusion on corporate boards and whether companies have policies that promote equal pay and work-life balance.

“But we can think of investing to advance women more broadly too. There are numerous investment funds that don’t brand themselves as gender lens, but do consider board diversity and other gender equality issues in their investment analysis.”

Gender lens investment products are also broadening in terms of which assets classes they cover, although the majority continue to feature global or U.S. large-cap strategies, noted Alison Pyott, partner and senior wealth manager at Veris Wealth Partners, during the webinar. 

Read: Canada’s largest institutional investors call for 30% women on boards by 2022

In its latest research, Veris noted gender lens investing is broadening by geography as well, although U.S.- and Europe-sponsored vehicles remain the majority.

Most of these funds focus on women in leadership roles, whether they narrow in on women on corporate boards, in the C-suite or management and sometimes all three, added Pyott. “We are seeing increasing focus on other gender factors including reducing the gender pay gap, increasing women in the workforce [and] lowering barriers to women in the workforce, such as childcare and family leave policies.”

While historically, these types of products have existed largely in the angel, venture capital, private equity and private debt investment spaces, she said, there’s an increasing number of routes for public investing with a specific gender lens, with gender bonds as one example.

Gender lens investing falls into the broader conversation about environmental, social and governance issues, noted VanderBrug. And as ESG investing grows in popularity, investing with a gender lens will increase as well. “We anticipate $20 trillion of asset growth into sustainable or ESG funds in the next two decades and I would say that we’re going to see an increasing proportion of those funds integrate gender factors.”

Read: Canada seeing measurable improvements in women on corporate boards: report