How does investing in gender equality perform?

In the world of investing, aligning financial goals with personal values is becoming a core strategy for investors who care about social impact. Using YourStake, a values-driven research group, I created a detailed analysis of three distinct investment options:

1. iShares MSCI KLD 400 Social ETF This exchange traded fund replicates The MSCI KLD 400 Social Index, a capitalization weighted index of 400 US securities that provides exposure to companies with outstanding Environmental, Social and Governance (ESG) ratings and excludes companies whose products have negative social or environmental impacts. This exchange traded fund is highlighted in Blue in the charts below.
2. iShares MSCI ACWI ETF This exchange traded fund replicates the MSCI All Country World Index captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,645 constituents, the index covers approximately 85% of the global investable equity opportunity set. This exchange traded fund is highlighted in Purple in the charts below.
3. YourStake’s invest in gender equality optimized portfolio” (YSO)* It considers and extracts companies from the MSCI ACWI index.t This is a custom-built portfolio that removes companies not aligned the metrics defined as “gender equality” below. With the remaining companies, it then creates a portfolio of approximately 225 companies that replicates the index in the gender equality optimized portfolio. This gender equality optimized portfolio is highlighted in Purple in the charts below.

While there can be many ways to view “gender equality”, I used the following metrics:

1. Women on Boards. The percent of a company’s board of directors that is female.
2. Best Workplaces for Women. Companies with positive reports from women and parity throughout workforce and management.
3. Discrimination Violations US and UK. Fines paid to the US government or UK government since 2016 for discriminatory employment practices or unequal access to products and services on the basis of age, gender, sexual orientation, disability, or veteran status.

Comparing Three Investment Portfolios

1. Investing in Gender Equality Returns Performance Over Time*

YourStake’s data shows that gender equality aligned investing does not have to mean sacrificing returns. In fact, their optimized portfolio outperformed broad-market benchmarks.

Key Takeaways:

• The YSO optimized gender equality aligned portfoliodelivered the highest returns across all time periods.
• The iShares MSCI KLD 400 Social ETF outperformed the broad ACWI index, reinforcing the financial viability of socially responsible investing.

2. Investing in Gender Equality Volatility & Risk Considerations*

One common concern is that gender equality aligned portfolios might be more volatile. However, YourStake’s analysis suggests that these portfolios had similar or lower volatility compared to broad market based index funds.

Key Takeaway:

• This finding suggests that investing in gender equality can offer a more stable investment experience while still achieving competitive returns.

3. Investing in Gender Equality Values Alignment*

One of the main benefits of a customized values-based portfolio is the ability to align investments with gender equality.

Key Takeaways:

• The optimized portfolio had the overall strongest gender equality and sustainability scores.
• The iShares MSCI KLD 400 did not score as high on gender-aligned policies, compared to the YSO Gender Equality portfolio.
• The iShares MSCI ACWI had weaker scores on gender-aligned factors.

Final Thoughts: Should You Invest in Gender Equality Values?

The YourStake analysis provides strong evidence that investing in gender equality is both a smart financial and ethical decision.

Key Takeaways

• Gender equality investing outperformed traditional broad benchmarks
• The YSO gender equality portfolio had lower volatility

Steps to Invest in Gender Equality:

1. Assess your portfolio’s alignment with your values – Use tools like As You Sow’s Gender Equality fund Screener.
2. Consider ESG or gender-lens ETFs – Look at funds like iShares MSCI KLD 400 Social ETF or other values-aligned choices.
3. Work with a financial advisor who focuses on values-aligned investing – Not all advisors specialize in this area, so find someone who aligns with your goals. You could look for advisors with this focus and that have access to research such as that from YourStake. InvestmentNews is even capturing an ESG Advisor in its Advisor of the Year Categories. First Affirmative is another network of advisors aligned with this practice.

In conclusion, investing in gender equality can increase investment performance. While women face distinct challenges in retirement planning, proactive steps and informed decisions can pave the way to a secure and fulfilling retirement. Embrace the resources available, align your investments with your values, and take charge of your financial future. Women can take active control of their financial futures while also making a positive impact on other women. Looking for more values aligned content? You may be interested in my Diversity, Equity And Inclusion Investments In Your Retirement Portfolio? and Aligning Your Roth IRA Investments With Your Racial Equity Values content.