Morgan Stanley
  • Wealth Management
  • Mar 16, 2021

Addressing Gender Equality in Impact Investing

Integrating gender-related criteria into your portfolio is getting easier, as investment options proliferate.

Every March we see a variety of images, quotes and stories of women innovators and groundbreakers in honor of Women’s History Month. From scientists and politicians to social advocates and financiers, women have done it all.

That said, significant gender gaps still persist globally in education, health and well-being, politics, the workforce and finance. Worldwide, in 2020, only 46.9% of women participate in the workforce, compared with 74% of men.Just 1-in-4 national parliament seats are held by women.2  As of August 2020, there only 13 women (2.6%) were CEOs for Fortune Global 500 companies.1

Many impact investors believe that diversity of perspectives can create greater economic value for companies and for investors. 

The good news: leveraging Gender Diversity as an investment strategy can have an impact on your returns.

Morgan Stanley’s Global Quantitative Team looked at 1,600 global stocks across five key areas of gender diversity (Equality in pay, empowerment, representation, diversity policies and work/life balance programs) and found that stocks with higher gender diversity delivered meaningfully better risk-adjusted returns than those with low gender diversity.3

Looking to add gender themes to your own portfolio? Here are three approaches to consider:

Use gender diversity as a screen: Use your restriction screens to avoid exposure to companies with poor gender diversity records, such as weak policies, poor supply chain safety records or involvement in industries known for bias against women.

Seek out gender-diversity leaders: Seek companies with leading gender diversity records, including strong policies and programs, diverse boards and management and work/life balance programs. Gender diversity is an opportunity to identify long-term outperformance.

Invest in companies that seek to elevate women and girls: “Gender-lens investing,” a term that was coined in 2009, seeks companies that not only embrace female representation at all levels in the workplace, but also offer products, services and capital aimed at improving the lives of women and girls, especially those who are marginalized because they are poor, uneducated, live in rural areas or are single mothers. Investors can aim for more direct impact on the causes they care about by choosing this approach across public and private markets for both equity and debt investments.

Integrating Gender Themes Into Your Portfolio

With the help of our team of Financial Advisors at Morgan Stanley Virtual Advisor, you can implement all three of these approaches, or pick just one. At Morgan Stanley, we believe portfolios need to be broadly diversified; not all asset classes and investing styles are represented with gender-focused funds, meaning that a partial solution may be most appropriate for your particular situation. You can carve out a portion of your portfolio for gender-themed investing, or use a fund or two for portions of your allocation and complement with a broader range of investment strategies that incorporate financial, environmental and social criteria.

No matter your approach, recognize that gender-focused investing can be an important part of a portfolio that meets your financial goals and risk tolerance, while also integrating diversity objectives.

 

 

Work with a Morgan Stanley Virtual Advisor to implement a gender diversity investment strategy