Invest in Stocks & ETFs Backed by Women Power
With International Women’s Day just around the corner, let us evaluate the position of women in the financial world. Firms having more female employees in top brass have a tendency to outperform the market. Per the latest S&P Global data, the stock price of companies that appointed female CEOs outperformed those that were headed by men by an average of 20% in the two years following the appointment.
A record number of 33 women now hold the top spot at Fortune 500 companies, representing substantial increase from 24 in 2018. Per Fortune data, women held 15.7% of board seats at Fortune 500 companies 15 years ago. Now, women hold 25.5% of those seats (read: 5 Top-Ranked Sector ETFs to Buy at Bargain Price).
According to many researchers, companies with greater levels of gender diversity on their board of directors were more profitable than their male-dominant counterparts. Gender diversity results in increased productivity, greater innovation, better decision-making, and higher employee retention and satisfaction. Companies with greater diversity on their boards have also experienced lower volatility in earnings and dividends. All these suggest a new era of women leadership in world economy.
Given this, many investors are seeking to add female-centric companies to their portfolio, although the list is still small. Below, we have highlighted some top-ranked stocks that are headed by female CEOs and have massive upside potential in the coming years.
International Business Machines Corporation IBM
This New York-based company provides advanced information technology solutions, including computer systems, software, storage systems and microelectronics. It saw solid earnings estimate revision of 17 cents over the past 90 days for this year, representing 4.3% growth year over year. The company also delivered positive earnings surprises over the past four quarters, the beat being 1.84%, on average. The stock has a Zacks Rank #2 (Buy) and a Value Score of B. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Best Buy Co. Inc. BBY
This is a Minnesota-based multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services. The stock has seen positive earnings estimate revision of 22 cents for the fiscal year (ended January 2020) in the past 90 days and is expected to see earnings growth of 4.9%. The stock has a Zacks Rank #2 and VGM Score of A.
Duke Energy Corporation DUK
This North Carolina-based diversified energy company has a wide portfolio of domestic and international, natural gas and electric and regulated and unregulated businesses, which supply, deliver and process energy in North America and selected international markets. It has seen positive earnings estimate revision of 8 cents for this year in the past 90 days, and has an expected growth rate of 2.8%. The stock has a Zacks Rank #2 and Growth Score of B (read: 5 Energy ETFs & Stocks That Gained From Rebound in Oil Price).
ETFs: A Better Play
While betting on an individual company is certainly a good option, investors can also play this space with lower risk and higher diversification benefits in a basket form. Currently, there are three products offering broad exposure to women-led companies. We have highlighted them in detail below.
SPDR SSGA Gender Diversity Index ETF SHE
This ETF offers exposure to U.S. companies that demonstrate greater gender diversity within senior leadership than other firms in their sector by tracking the SSGA Gender Diversity Index. It holds 176 stocks with none accounting for more than 5.6% share. From a sector look, information technology, healthcare, financials and consumer discretionary receive double-digit exposure each. The product has amassed $140.9 million in its asset base while trades in light volume of about 33,000 shares. It charges 20 basis points (bps) in annual fees (see: all the Large Cap ETFs here).
Impact Shares YWCA Women’s Empowerment ETF WOMN
This ETF has attracted $6.8 million in AUM and trades in volume of under 1,000 shares a day on average. It tracks the Morningstar Women’s Empowerment Index, which is designed to provide exposure to companies worldwide with strong policies and practices in support of women’s empowerment and gender equality. It holds 184 stocks in its portfolio, with none making up for more than 5.1% of assets. However, the product is tilted toward the information technology sector at 24.9% while healthcare, financial services and communication services round off the next three with double-digit allocation each. It charges 76 bps in annual fees.
Barclays Women in Leadership ETN WIL
This product is linked to the performance of the Barclays Women in Leadership Total Return USD Index, which provides exposure to U.S.-based companies that satisfy one or both of the gender diversity criteria of having a female chief executive officer or having at least 25% female members on the board of directors. The ETN has amassed $4.6 million in its asset base and trades in a paltry volume of around 500 shares. Expense ratio comes in at 0.45%.
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International Business Machines Corporation (IBM): Free Stock Analysis Report
Best Buy Co., Inc. (BBY): Free Stock Analysis Report
Duke Energy Corporation (DUK): Free Stock Analysis Report
SPDR SSGA Gender Diversity Index ETF (SHE): ETF Research Reports
Barclays Women in Leadership ETN (WIL): ETF Research Reports
Impact Shares YWCA Women's Empowerment ETF (WOMN): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.