Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
… as diversity goes mainstream with State Street’s SHE
(pictured: Kristi Mitchem)
On the day before International Women’s Day, last week, State Street Global Advisors announced the launch of its latest exchange traded fund: the SHE. Perhaps gender diversity may become the newest smart-beta factor for quantitative investing.
When fund managers think they can make money out of a trend you know one thing: it’s at least a trend. It may not be sustainable, and therefore not a true ‘factor’ as the quants would define one, but it is certainly a market anomaly, of sorts, which can be exploited, at least in the short term. But that’s only one way of looking at the SSGA diversity (US ticker code: SHE) ETF.
Another way, which is somewhat more cynical, is that diversity has become a political and funds management industry issue. In the US, Australia, UK and Europe, and also throughout Asia, companies and institutional investors are becoming increasingly aware of diversity as an important goal in all aspects of business and investment life. So, maybe the SHE will appeal to investors making a political, social or even moral choice in their investment portfolio, rather than one based solely on risk and return.
SSGA’s SHE, more formally known as the SPDR Gender Diversity Index ETF, will comprise US large-cap stocks with the highest level of gender diversity on their boards and among their senior management. This would currently mean about 144 stocks out of a universe of 1,000 US large caps.
Kristi Mitchem, an executive vice president and head of the Americas for the Institutional Client Group at SSGA, said: “SHE seeks to help address gender inequality in corporate America by offering investors an opportunity to create change with capital and seek a return on gender diversity… This fund empowers investors to encourage more gender diverse leadership and support better long-term social and economic outcomes in support of gender diversity.”
According to a 2015 MSCI study that explored global trends in gender diversity on corporate boards between December 2009 and August 2015, companies with at least three female board members outperformed others in overall return on equity by more than 36 per cent. Despite these findings, American women account for an average of just 16 per cent of the members of executive teams.
SSGA was inspired to develop the Index by the California State Teachers’ Retirement System’s (CalSTRS) efforts to move the needle on gender diversity in corporate America, especially for women in leadership positions, the fund manager said in a statement.
To help strengthen third-party charitable organizations committed to enhancing gender diversity, SSGA will direct a portion of its revenue to non-profit organisations that help develop girls as leaders in business and science.
Alison Quirk, chief global human resources and corporate citizenship officer at State Street, said: “Closing the gender gap requires strengthening gender diversity and inclusion practices across corporate America. We believe that the root causes of biases that influence women being underrepresented at the most senior levels of executive and board leadership develop at an early age. We want to empower girls to take their place in business leadership, especially in science, technology, engineering and math (STEM) industries that will be in high demand for the next 10 to 20 years. By paying it forward through the charitable contribution, we can build a better future.”
