Other metrics include whether a company portrays women responsibly in advertising, promotes women and pays a living wage. Baron also looks at products that help women in developing economies, including solar-powered lights or stoves -- “I’m not talking about pink laptops.” Only about 125 companies out of the S&P 1500 survive. “They also do tend to be pretty good performers,” he says.
In the U.S., one new strategy in the market is the year-old $80 million Pax Ellevate Global Women’s Index Fund, managed by a joint venture of Pax World Management LLC and Ellevate Asset Management, the firm of former Bank of America and Citigroup executive Sallie Krawcheck. It selects companies with women directors and top managers and asks them to sign the United Nations Women’s Empowerment Principles accord if they haven’t already. The fund includes about 400 stocks from the 1,600- strong MSCI Index, says Joe Keefe, president and CEO of Pax World.
The top 10 holdings include Key Corp., Pepsico Inc. and even defense contractor Lockheed Martin Corp. -- all led by women. No Japanese company is represented, and male-heavy tech companies like Apple Inc. don’t make the cut. The fund has outperformed its benchmark this year.
‘Better Metrics’
Barclays Bank Plc has a completely different approach, with an exchange-traded note that mathematically tracks the bank’s Women in Leadership index of companies that either have 25 percent women on their board or a female CEO. But investors aren’t putting money directly into those companies, because the note doesn’t buy the stocks in the index; it replicates their performance with a formula. Marketed to asset managers who can sell it to retail clients, the note has underperformed the S&P 500 index this year.
Female-focused funds are small -- for the most part with less than $100 million under management -- but will grow as socially responsible investing continues to gain traction, says U.S. Trust’s Vanderbrug. In the next few years, “we’ll have better metrics,” says Lisa Woll, CEO of US SIF, the Forum for Sustainable and Responsible Investment. “This field is going to evolve a lot.”