In an effort to provide a market-based solution to the problem of the underrepresentation of women in executive management and on corporate boards, a new U.S. mutual fund was launched Wednesday that gives investors the opportunity to invest in companies that are considered global leaders in advancing the interests of women.
The fund, the first of its kind, represents a partnership of Ellevate Asset Management LLC and Pax World Management LLC, which are teaming up to manage and distribute the Pax Ellevate Global Women’s Index Fund.
The fund will be an index fund that tracks the Pax Global Women’s Leadership Index, which is comprised of companies that demonstrate a commitment to advancing women either through gender diversity on their board, in executive management, and through other policies and programs. The index constituents also meet environmental, social and governance standards, as rated by MSCI ESG Research.
According to the firms, women hold 31 % of board seats in companies in the new fund, and 24 % of senior management positions; compared to global averages of only 11 % in both areas. Overall, 97% of the companies in the fund have two or more women on their board, and nearly 70% have at least three women on their board.
Wall Street veteran, Sallie Krawcheck, is a principal of Ellevate Asset Management, and will serve as chair of the fund’s investment adviser, Pax Ellevate Management LLC. She has also been elected to the fund’s board of trustees.
The fund partnership represents the first investment by Krawcheck since she purchased the Ellevate Women’s Network last year (which was formerly known as “85 Broads”). She is the former president of global wealth & investment management at Bank of America, including Merrill Lynch and U.S. Trust; former CEO of Citigroup’s wealth management business, including Smith Barney and the Citi Private Bank; and former director of research, chairman and CEO of sell-side research firm, Sanford Bernstein.
“This is a major step forward in directing investor capital to the highest-rated companies in the world in advancing women’s leadership. We believe that it is simply smart business to invest in women and that this investment case will be borne out over time by the performance of this global index fund,” said Krawcheck.
“I can think of no better way to invest in women than to invest in those companies around the world that have distinguished themselves by both their business performance and their leadership in advancing women,” added Krawcheck. “This fund represents a market solution to a global business challenge – the need to increase the number of women on boards and in management. The business edge that often comes from more diverse leadership teams is an investment idea whose time has come. These are not niche companies. Many are widely-recognized brands in their fields, and I look forward to shining a spotlight on – and helping putting capital behind –the kind of progressive thinking that can yield strong company performance.”
Recently, regulators in various countries have been taking action to encourage greater female representation on corporate boards. Earlier this year, the Ontario Securities Commission (OSC) proposed amendments to corporate governance rules, which would require issuers to disclose their policies to women on boards and in upper management.