Women have decision-making power over $11.2 trillion or 39% of all investable assets in the U.S., according to Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth, a report by the Center of Talent and Innovation. That’s a whole lot of money that women can use to make an impact.
An overwhelming percentage of women — 90% — want to make a positive impact on society the report finds. Research by U.S. Trust confirms this.
To understand what female investors want, Tom Huvane, UBS Financial Services, conducted a series of focus group. What he found surprised him. Women focus on outcomes not tactics, he said in Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth. Women situate their investments within the larger framework of what they want to achieve for themselves, their career, their families, their communities, and causes they care about, he said.
Changing the primarily male composition of senior leadership in corporate America is one of those things that women want to change. Not just because it’s the right thing to do but because diverse companies perform better.
Geri Pell, CEO of Pell Wealth Partners, a private wealth advisor, began recommending impact investments when she realized that it matched her values and the values of many of her clients. Importantly, after researching returns of impact investments, Pell found out that they delivered market rate return or better. Her clients didn’t have to sacrifice financial return to make a social impact.
“Research indicates that companies with more women in senior management have higher returns on capital, lower volatility, greater client focus, increased innovation, and greater long-term orientation,” said Sallie Krawcheck, Chair of Ellevate (formerly 85 Broads), a network that has 34,000 members from 130 countries around the world. She also headed Bank of America and Citi wealth management divisions and is a former research analyst. Research conducted byCatalyst, Center for Talent Innovation, Credit Suisse Research Institute, Harvard,McKinsey and Thomson/Reuters find that diversity improves the bottom line. Veris’ research focuses on how gender investing allows investors to make both an impact and money. Yet, despite the powerful business case for women’s advancement, only 16% of Fortune 500 board seats are held by women and only 5% of Fortune 500 CEOs are women.
Krawcheck wasn’t the only one who thought women could use their portfolios to make an impact. “Women, it seems, are more inclined to want their investments aligned with their values while men are more likely to compartmentalize – investments in one compartment, moral and political values in another,” wrote Joseph Keefe, President and CEO of Pax World Management. Keefe and Krawcheck met about a year ago. They discussed their mutual passion and how they might work together. The result Pax Ellevate Global Women’s Index Fund (PXWEX).
PXWEX is a customized index, based on MSCI, which is a widely tracked set of global equity benchmarks that serve as the basis for more than 650 exchange-traded funds. The Fund invests in approximately 400 of the companies most highly rated in the world for advancing women’s leadership on boards and in executive management. It is the first of its kind – and is the only mutual fund in the United States that focuses on investing in advancing women’s leadership. Holdings include PepsiCo, which has a female chief executive and five women on its 13-member board, and Lockheed Martin, where 30% of corporate officers (including the CEO) and 33% of board members are women.
Please note that any performance data for PXWEX prior to June 4, 2014 is for Pax World Global Women’s Equality Fund a predecessor to the Pax Ellevate Global Women’s Index Fund .
“I belong to several exclusive networking groups for executive women. The women I interact with are looking for a way to invest in women-owned businesses and in corporations that support women at the C-level and in the boardroom,” said Kathleen Godfrey, president of Godfrey Financial Advisors. “The PAX Ellevate Women’s Fund is a perfect fit,” she continued.
PXWEX resonated with women I spoke with who have gone through the Pipeline Fellowship program, which is an angel investing bootcamp for women who invest in female social entrepreneurs.
- “As a woman and an investor, I intend to have all of my assets working to create the kind of world I want to live in,” Suzanne Andrews, Impact with Wings. “This new fund is very exciting to me.”
- Before Karen Bairley Kruger invests in a company she wants to know which companies share her values. “[With PXWEX] I can see at a glance the percentage of women execs in a company as well as how many women are on its board,” she said. “I can also trust that the companies truly walk the talk and are committed to advancing women’s visibility in business, which in turn increases their power and contribution in the shaping of a business and its ultimate social impact.”
- “I started angel investing primarily to make a bigger impact in our society, said Christine Emilie Lim. “The PAX Ellevate Women’s Fund can certainly be a catalyst of that same goal.”
“Men also see the value of diversity at the board and management level,” said Godfrey. “The fund is a great opportunity for a wide range of investors. It just makes good economic sense.”
How will you use your portfolio to make an impact?