Why more women in the boardroom matter to your portfolio
Gender equality gives investments an edge
Investing in companies top heavy with men - particularly at the board level - could be letting your portfolio down.
It is better to go for companies with plenty of women throughout the company and in top roles who are being paid equal salaries to their male counterparts.
Why? Because they perform better than those with low gender diversity, according to new research by UBS Wealth Management.
Gender diverse companies tend to outperform on various profitability measures compared to companies with low female representation explains Rachel Whittaker, sustainable investing strategist at UBS Wealth Management. She found companies with women making up at least 20% of the board and senior management had higher returns than those companies with a low female representation.
"We believe these findings support approaches to gender lens investing that take into account diversity at all levels of the organisation as well as in leadership positions," says Whittaker.
Not surprisingly UBS has launched a global gender equality ETF (Global Gender Equality UCITS ETF) that invests in an index of 100 leading global companies with a strong record in gender diversity and sustainability. It is available on overseas markets in US dollars but is not on the ASX yet.
The companies are selected based on 19 diversity criteria, including equal compensation and work-life balance, transparency and accountability, gender balance, and sustainability policies.
The ETF includes the 30 highest rated US companies.
As a sweetener UBS donates 5% of its management fees for the ETF to philanthropic projects supporting the United Nation's Sustainable Development Goal 5 via the UBS Optimus Foundation. Through its choice of index, the ETF also contributes to Equileap, a social enterprise committed to accelerating progress towards gender equality in the workplace.
Last year UBS launched a five-year plan to focus its efforts for female clients, explains Olga Miler, managing director at UBS Wealth Management.
"Gender equality is important to our clients and our business. The combination of broad gender equality criteria, sustainability and donation make this ETF a leap step forward in connecting capital to the United Nations' Sustainable Development Goal 5 - achieving gender equality and empowering all women and girls."