Invest in Women-Led Companies With These ETFs

On International Women’s Day, let us put the spotlight on the power of women in the world of business. Firms having more female employees as top brass have a tendency to outperform the market. A 2019 study from S&P Global Market Intelligence found that public companies with women in the CEO spot or serving as a chief financial officer were more profitable and had a stronger stock price performance compared to companies with men in the top jobs.

In 2020, more high-profile women than ever climbed their way to the top spots at the Fortune 500 companies to take over from male predecessors. The number of women running the Fortune 500 companies hit an all-time high of 37 in 2020. This is up from 33 in 2019, 24 in 2018 and just two seen 20 years ago. During the first quarter of 2021, 40 women are leading Fortune 500 companies (read: ETFs to Play Growing Women Empowerment in Corporate America).

According to many researchers, companies with greater levels of gender diversity on their boards of directors were more profitable than their male-dominant counterparts. Gender diversity usually results in increased productivity, greater innovation, better decision-making as well as 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.

California is leading the charge with the Women on Boards law, which required all publicly held corporations with principal executive offices located in the state to have at least one female director on their boards by Dec 31, 2019, by either filling an open seat or making one. As many as two female directors will be required by Dec 31, 2021 for larger publicly held companies.

In order to prop up women power, Nasdaq in December sought permission from the Securities and Exchange Commission to require all listed companies to have at least one board member who identifies as female and at least one board member who is LGBTQ or a member of an underrepresented group (read: Nasdaq ETF's Worst Day Since October: Stocks That Survived).

If we come to managing the COVID-19 crisis, which has put the economy into a recession last year, study found that women leaders have navigated the pandemic more successfully than comparable male counterparts.

Given this, many investors are seeking to add female-centric companies to their portfolio, although the list is still small. 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 a few 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 165 stocks with none accounting for more than 6% share. From a sector look, information technology, healthcare, consumer discretionary and financials receive double-digit exposure each. The product has amassed $202.6 million in its asset base while trades in a light volume of about 10,000 shares. It charges bps in annual fees (see: all the Large Cap Blend ETFs here).

Impact Shares YWCA Women’s Empowerment ETF WOMN

This ETF has attracted $14.6 million in AUM and trades in volume of about 2,000 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 170 stocks in its portfolio, with none making up for more than 6.5% of assets. The product charges 75 bps in annual fees and has a Zacks ETF Rank #3.

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 $3.6 million in its asset base and trades in a paltry volume of around 200 shares. Expense ratio comes in at 0.45%. WIL has a Zacks ETF Rank #3.

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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.

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