Gender-lens investing experiences rapid growth

Gender-lens investing experiences rapid growth

Gender-lens investing has been gaining momentum. Falling under the umbrella of ‘sustainable investing’, it is a segment that seeks to achieve a financial return while championing gender equality through measurable means. It involves investing in businesses that have services that empower women or are gender diverse. This includes having women amongst the founding team, occupying a leadership position or sitting on a board.

Last month, The Financial Times reported that ETFs with a ‘gender-lens’ are growing. Between June 2018-June 2019, assets with a gender-lens focus in mutual funds and ETFs grew by 85%. Veris Wealth Partners confirmed this to be a total worth of $2.4bn. Whilst the summative amount invested in ETFs is small, the category is experiencing rapid growth. and the firm predicts that by 2023, gender-lens investing will grow to $20bn.

A study conducted by consultancy Catalyst at Large and Wharton business school of Philadelphia also depicted that assets in gender-lens strategies amongst private funds reached a value of $2.2bn globally this summer. Whilst the figures are comparatively small to other investment strategies, the value shows an 73% increase from 2018.

Catalyst at Large and Wharton business school of Philadelphia further confirm that the demand of gender-lens investing also corresponds with the increase of women in leadership positions and increased wealth. Next year, it has been predicted that women will have $72tn of global financial assets. Next year 32% of global private wealth will be in hands of women. These are figures set to rise.

According to The Fix, Tamara Gillian, Founder of The Wealthiher Network stated that ‘economic and social factors are dramatically shifting wealth so that by 2025, 60% of the UK wealth will be in the hands of women’. She continues to say that It is a stat ‘that will be mirrored in the US and will also be emerging in markets such as Asia’. What’s more, the Centre for Economics and Business Research predicts that 53% of millionaires in the UK will be female by 2025.

Whilst impact investing seeks to combine gender-based factors into decisions surrounding investments and promote gender equality within the workplace, and is gaining momentum, evidence shows that women still have limited access to capital.

Last year, Fortune reported that female founders secured just 2.2% of all Venture Capital Dollars in 2018. The collective figure was $10 billion less in funding that what Juul, an emerging e-cigarette company, took by itself.

Yet, despite this, Forbes reported that European companies with a larger share of women in senior positions have significantly higher returns and greater diversity on boards is illustrative of long-term value creation and lower stock price volatility. First Round Capital also confirms that start-ups with a woman on the founding team perform 63% better than those with all-male founding teams. As such, funds with a gender-lens focus could be opportune for managers and financial advisors.