Canada’s economy is currently taking a $150-billion hit because we are holding women back, and you don’t need to be an investment banker to conclude that is a lot of money. In fact, efforts to empower Canadian women, through equal pay and career opportunities, would add four per cent to Canada’s GDP. In short, that means more jobs, more wealth, and more happy Canadians.
That business case is why last week’s federal budget announcement applies a gender lens to all policies; so that Canada’s economy can grow through the benefits of gender parity.
A complementary trend
To complement the federal government’s highly genderized budget, a trending investment practice has recently emerged — gender-based investing through exchange traded funds (ETFs).
Toronto-based, Evolve ETFs, was the first to market in Canada with HERS . Mackenzie Investments was fast to follow with their prospectus for MWMN. In recent years SHE launched in the U.S. while ELLE launched in Europe.
These ETFs include an index, or compilation, of gender-diverse companies that have progressive policies and practices that support women and minorities. Some of the measures are parental leave, equal pay for equal work and women in leadership positions.
The brains behind the index
To understand the trend better, I sat down with female entrepreneur and investment maven, Diana van Maasdijk, co-founder of Equileap, while she visited Toronto from Amsterdam, where the head offices of Equileap are located.
The real financial driver for this gender-focused ETF trend, is that gender-diverse companies in North America deliver a higher rate of return compared to low gender-diverse companies — up to 2.2 per cent greater annualized returns, according to Morgan Stanley.
“That’s because organizations that are gender-diverse, at all levels, are more forward-thinking and efficient, which is what makes them more profitable,” says van Maasdijk.
Canadian organizations like BMO, ScotiaBank, Intact and Sunlife have made the cut into the index.
Getting the word out on the effectiveness and profitability of gender-diverse ETFs is key. Right now, these kinds of ETFs can be seen as “niche,” but their performance is actually higher than comparable North American dividend mutual funds.
The other important aspect to adoption is greater transparency of companies to disclose their gender-diverse policies and practices, an area that last week’s federal budget addresses. Currently, disclosure is a challenge.
Admittedly, I’d never taken a gender lens to my investments before 2017. But, I’m doing that now because gender-parity is a core part of my values and I want to invest in organizations and products that reflect my passions and beliefs. And, because the business case for gender-diverse investing is strong and clear, I’m not leaving money on the table. In fact, I might just beat the market.
That’s called socially responsible investing.
Published by Metro News March 8th, 2018.
Related Content: Gender-diverse Investing: a Morning with Diana van Maasdijk