- Publicly traded gender lens equity funds (GLEFs) totaled US$4 billion in AUM as of December 31, 2021. AUM grew 12% during the fourth quarter.
- 2021 AUM growth for the GLEF group was 51%.
- There are 10 global equity funds and 17 regional equity funds available to individual investors. These are domiciled in the U.S., Canada, the E.U., South Korea, and Japan.
- Gender lens fixed income AUM was US$8.5 billion as of December 31, 2021, as growth was largely flat for the quarter. Vehicles include U.S. and emerging markets funds, private financial institution bond issues, development finance institution (DFI)- backed bonds, U.S. notes and certificates, and a lending platform.
- 2021 AUM growth for gender lens fixed income was 75%.
- We have initiated coverage in sustainable bonds which employ a gender lens.
- Diversity, equity, and inclusion (DEI) funds totaled US$198 million in AUM as of December 31, 2021. This growing group of funds focuses on investing in companies with robust DEI policies.
- The report summarizes the top ten themes from our 2021 analyses.
- The report provides an in-depth analysis of economic and corporate gender gaps. The analysis includes a breakdown of how gender lens investing across the capital markets spectrum is addressing the gaps.
- The Parallelle Finance Scorecard is a tool for evaluating funds with an in-depth gender lens
2021 Year in Review
For the world’s 3.9 billion women, 2021 was a year of setbacks within the global economy and the workplace. The unequal gender impact of the COVID-19 pandemic deepened existing disparities that were felt by women in developed and developing economies alike. Various policy solutions and regulatory responses were advocated at local, national, and global levels. Some were implemented with varying degrees of effectiveness. The report summarizes the top ten themes from our 2021 analyses.
Addressing Persistent Gaps
As 2022 gets underway and the latest wave of the COVID-19 pandemic diminishes in parts of the world, what is the outlook for investing in women? Due to the setbacks of the pandemic, many gender gaps have widened, and the road to economic equality has lengthened. The current landscape of investment in women is one of overlapping gaps. The report presents an analysis of three key zones of economic and financial gaps facing women as workers, equal employees, leaders, investees, and investors. These are (a) workforce inequality, (b) financial resource inequality, and (c) workplace inequality. We also present ways that gender lens investing is addressing the gaps.
Parallelle Finance Coverage Universe: Q4 Update
A range of studies spanning 15 years, as summarized by Parallelle Finance here, have shown a connection between higher levels of women in leadership (WIL) and higher return on equity, better profitability, lower incidences of fraud, and better risk management. A growing number of public sector gender lens equity and fixed income funds invest in companies with relatively stronger WIL metrics and higher levels of the equality measures that drive diversity in leadership. These measures include pay parity, pay gap reporting, paid caregiving, workplace flexibility, and anti-sexual harassment policies. With a growing focus on broad-based corporate diversity, equity, and inclusion (DEI), research on the benefits of diverse leadership is now making a welcome push into racial diversity.
A suite of gender lens equity funds (GLEFs) has grown from the wide body of research demonstrating the performance and other benefits of higher levels of women in leadership (WIL). GLEF criteria are centered around investing in companies with higher WIL and strong additional equality metrics, including pay equity and disclosure and policies supportive of retaining and promoting women. There are 27 GLEFs available to individual investors, including ten global equity funds and 17 regional equity offerings. As of December 31, 2021, assets under management (AUM) for the GLEF group was US$4 billion. Eight funds in the GLEF universe are domiciled in the U.S., including one global fund and seven U.S. equity funds. Seven are based in Canada, eight in Europe, three in Japan, and one in South Korea. There are three pairs of mutual funds/ETFs. The funds hold between 30 and 443 stocks. For key stats on these 27 funds, see here.
Along with the broader market, most of the group of 27 GLEFs posted gains for the quarter, with only the Japan and Korea funds trading down slightly. Figure 4.1shows the top absolute performers for the quarter (in base currencies), as well as their weights in the top two sectors for the GLEF group. Relative performance for the 3- and 12-month periods was mixed. A full discussion of fund performance and composition is included in the report. For 3- and 12-month performance figures, see here.
In addition to equity funds, the Parallelle Finance coverage universe incorporates a growing array of private and public gender lens fixed income (GLFI) funds and vehicles. These include U.S. and emerging markets funds, private financial institution bond issues, development finance institution (DFI)-backed bonds, DFI-issued bonds, U.S. notes and certificates, and a lending platform. As of December 31, 2021, total AUM of gender lens fixed income funds and vehicles was US$8.5 billion. While quarterly growth was largely flat, AUM in these funds and vehicles grew 75% for the year.
The Parallelle Finance Scorecard
The Parallelle Finance Scorecard is a tool for evaluating funds with an in-depth gender lens. The Scorecard applies five grade levels to four categories, each comprised of scores from sub-categories and indicators. Taken together, the categories assess both the fund and the asset management firm on gender equality in investment criteria, holdings, portfolio management team, and firmwide leadership, as well as the fund's performance and overall ESG approach.
This article is a summary of the "Gender Lens Investing 2022" report released by Parallelle Finance.
To read the full report please click here.
Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.
Marypat Smucker is Co-Founder and Principal of Parallelle Finance, a research, analysis, and advocacy firm focusing on gender lens equity and fixed income investing. The firm publishes comprehensive quarterly reviews of gender lens investment funds and vehicles, as well as special topics on women in the global economy.