Practical analysis for investment professionals
16 November 2020

Gender Lens Funds: Ups and Downs for Women in the Workforce

The third quarter was an eventful one for gender lens investing as well as women in leadership (WIL) in the financial sector and elsewhere.

Gender lens equity funds turned in modest positive returns, a trajectory in line with the broader market. This suite of mutual funds and exchange-traded funds (ETFs), which developed in response to evidence that companies with higher WIL metric generate superior financial and stock price performance, includes 23 primary gender lens equity funds that are available to individual investors. Of these, nine are global and 14 are regional.

Overall, the year-to-date (YTD) returns for the sector are mixed amid the sharp price swings resulting from the global pandemic and the associated economic downturn.

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Among global equity funds, four came in ahead of the MSCI World Women’s Leadership Index for the quarter, while only two outperformed the MSCI World Index. The Mirova and AXA funds outpaced their benchmarks. Among regional funds, those focused on the United States, Canada, and Japan generally tracked their benchmarks, while their European counterparts surpassed theirs. Noteworthy regional outperformers were Impact Shares YWCA, Ampega, and the BNY Mellon Japan Womenomics Fund.

The assets under management (AUM) for gender lens global equity funds is now $2.03 billion, up from $1.74 billion at the close of last quarter. Global equity makes up 76% of the total, and at 57%, the United States remains the leader in AUM-weighted allocations, followed by Canada, France, and Germany. The two largest sectors are information technology and financials.

An Eventful Quarter for Women in Financial Services

Q3 had its share of ups and downs around particular themes for WIL and WIL metrics. Women in financial services leadership was one bright spot. Citigroup announced that Jane Fraser will become its first female CEO in February, which will make her the first woman CEO of any major global bank. This milestone is indicative of a wider cultural shift at Citigroup. Last year, it became the first major US company to disclose both the median and adjusted gender and racial pay gap for its global operations. It also launched an advertising campaign to encourage addressing the gender pay gap. For Citi, that gap declined slightly from 29% in 2018 to 27% last year.

And Citigroup wasn’t alone in women in leadership announcements. Other banks made similar moves. JPMorgan added Thasunda Brown Duckett, CEO of its consumer banking division, to its operating committee, and Goldman Sachs selected Stephanie Cohen to co-head its consumer and wealth management business.

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Will these important strides mean faster progress for gender equality in financial services? That remains to be seen. But progress for women has been too slow. Women represent only 23% of board directors at major financial firms and only 12% of CFOs in large-cap financial services companies, according to data from Catalyst. Of the nearly 400 companies with a woman CEO, president or board chair, only 16% were financial firms. That’s according to Parallelle Finance’s compilation of women in leadership among the companies in 17 major indexes, including the multi-cap Russell 3000 and S&P 1500.

Indeed, if there was any question as to the depth and cost of the financial sector’s gender cap, a recent Goldman Sachs analysis of YTD returns for funds with all-male, all-female, and mixed-gender portfolio management teams provided a sharp reminder. Even after adjusting for risk, the 116 teams with at least one-third female membership outperformed their 380 all-male counterparts. Asset management is increasingly in the hot seat as more attention is paid to this sort of data. For example, Bank of America recently announced that it will begin ranking and recommending asset managers based on diversity scores.

Major Setbacks for Women’s Workforce Participation

While woman have made gains this quarter, particularly when it comes to leadership in the financial sector, they have faltered in other areas. The global pandemic’s toll on women, in the form of a caregiving crisis and outsized job losses in the United States and across the globe, have become even more pronounced. The female labor force participation rate in the United States fell below 55% in the first quarter for the first time since 1986. How much does such disruption to the careers of US women cost? Estimates put the caregiving crisis’s price tag at $341 billion.

And these recent headwinds come on top of other longstanding and systemic challenges. There is a broken rung on the corporate ladder for women trying to reach that first management level. This contributes to a long-term gap for women throughout their careers. Add to that the well-documented and outsized burden of unpaid care work and the more frequent breaks or departures from their positions that this generates, and the scale of the challenge women face comes into fuller relief.

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What’s at risk amid the pandemic are women’s hard-won progress in corporate leadership and the sustainability of a diverse US workforce. In fact, according to the National Women’s Law Center, 80% of workers who dropped out of the labor force in September were women, who, in turn, gained only 43% of newly created jobs.

The challenges are clear. As researchers continue to advocate for a women-focused recovery, public and private gender lens investing has a role to play. It can both promote progress in narrowing the WIL and gender pay gaps and make that progress more investable.

For more analysis from Marypat Smucker, CFA, visit Parallelle Finance.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images / SolStock

About the Author(s)
Marypat Smucker, CFA

Marypat Thenell Smucker, CFA, is a writer and research analyst with a focus on gender lens and environmental, social, and governance (ESG) investing. Her work can be found at

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