A new asset class: Gender

A new asset class: Gender

A new asset class: Gender Well-known wealth management executive Sallie Krawcheck has just announced the launch of the world`s first gender-based mutual fund.

The former head Bank of America’s wealth management division has announced the new fund will invest in companies committed to advancing women through gender diversity. Companies inclided in the index will have women on their boards of directors and have adopted the United Nation’s Women's Empowerment Principals. 

“The business edge that often comes from more diverse leadership teams is an investment idea whose time has come,” Krawcheck is quoted as saying. “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. As a result, I believe they should also deliver better stockholder returns over time.”

There is a large pile research backing up the claims. A 2011 study found companies with three or more women corporate directors outperformed those with no women on the board by 84% on return on sales, 60% on return on invested capital and 46% on return on equity. A 2012 Credit Suisse Research Institute report found that companies with women directors outperformed those without women directors in return on equity, average growth, and price/book value multiples. A 2013 Harvard University study concluded that the return on equity and net profit margin of companies with at least three women directors was significantly stronger than companies with boards that did not have such diversity.

“Many CEOs I speak to, of both genders, recognize this is no longer a woman’s issue, but a business performance issue. And this type of investing represents a markets-based solution to the very real business opportunity, and business challenge, of diversity,” said Krawcheck.

All of the companies in the fund have one or more women on their board of directors; 97 percent of the companies have two or more women on their boards. Back dating returns on companies in the fund, year-to-date the fund has returned 2.8 percent--for the year ending April 30, 18 percent.