Green Alpha Advisors, an asset manager based in Boulder, is introducing a socially responsible portfolio that takes gender and diversity into consideration for its investments.
The Next Economy Social Index portfolio has been in testing since 2015 and is now available for clients with separately managed accounts, the firm announced recently.
To manage the index, Green Alpha starts with its Next Economy Index and then removes any companies that lack strong female representation in leadership or on the board. Weights are set based on market cap, with additional portfolio weight given to companies that are doing more than the minimum needed for inclusion, meaning ones where women hold positions of significant authority or have especially strong representation in leadership, or companies with corporate policies that are overtly socially inclusive, Green Alpha said.
Diverse teams outperform homogeneous teams because they are more creative, take more facts into consideration and innovate more, Green Alpha said.
“Gender diversity is clearly just one material aspect of any given team’s composition, but an important one that clients are asking about. Clearly, investors are recognizing the value of diversity, too,” Betsy Moszeter, investment committee member and chief operating officer, said in a statement. “Done correctly, a diversity-centric portfolio can offer investors the opportunity to earn higher return on equity, benefit society and reward companies that recognize the top- and bottom-line impacts of significant female representation in leadership and on their board of directors.”