It’s a way to bank on social impact.
The SPDR Gender Diversity Index ETF, specializing in investing in companies with more women in senior management, will debut Tuesday.
According to its creator, asset management firm State Street Global Advisors, the fund hopes to achieve market-rate returns by tracking large-cap companies “with the highest levels within their sectors of gender diversity on their boards of directors and in their senior leadership.”
Its ticker is aptly named SHE, and its rationale is simple: invest in companies with women in CEO, board, or senior level positions, thereby encouraging more companies to support a gender diverse workforce.
“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,” said Kristi Mitchem, executive vice president and head of the Americas Institutional Client Group for SSGA.
But the fund isn’t just based on blind optimism and human faith.
State Street Global Advisors is banking on research from the McKinsey Global Institute and the MSCI that shows companies with a strong female leadership outperform peers in overall returns in equity.
In a 2015 MSCI study, companies with at least three female board members outperformed others by an average of 36%.
The fund hopes to gather a sizable $1.5 billion to $2 billion in assets within its first year, Mitchem said to the New York Times. Already, the fund has gotten $250 million from the California State Teacher’s Retirement System. CalSTRS plans to increase that investment to $500 million in coming months.
Granted, SHE is not the first ETF to invest in companies that seem to promote women more often. According to the New York Times, Barclays created a exchange-traded note called Women in Leadership ETN in 2014 with $27.6 million under management, while Denver Investments created the Workplace Equality Portfolio ETF, with $10 million in assets.
Roughly defined, ETFs are a basket of securities, bonds, or commodities and trade like a security. SHE will track about 144 stocks from the Russell 1000 index.