Regarding Emma Boyde’s report “Gender equality fund performance disappoints” (ETF Hub, FT.com, July 8), gender lens investing — that is investing in companies that include women in the founding team, the leadership, the management team or on the board or in companies that offer products or services specifically benefiting women — has experienced steady growth over the past decade.
Within public markets there are $4.6bn in assets under management in GLI equity funds — $15.8bn in fixed income investments as of March 2024. There are at least 175 private market gender lens funds, with a market size of $7.9bn, while the G7’s 2X Challenge, a commitment by multilateral finance institutions to invest in the world’s women, has mobilised over $33.6bn in gender lens investments since 2018.
This growth underscores GLI’s materiality. A review by Vanguard of over 2,600 US active equity funds found that mixed-gender teams outperformed all-male and all-female teams — and the benchmark — by 47 basis points per year. In The XX Edge: Unlocking Higher Returns and Lower Risk Patience Marime-Ball and Ruth Shaber highlighted studies showing that gender-diverse investment teams reduce risk and improve returns. A 2015 report by McKinsey Global Institute suggested equal participation of women in the global economy could add $28tn in gross domestic product.
Despite this, gender is not yet fully accepted as a metric by all finance professionals. Board level diversity has risen, but other aspects of parity in terms of leadership, ownership and more broadly how a gender lens cuts across the value chain has substantial room for progress.
Boyde’s article critiquing the performance of gender lens vehicles in public markets highlights these challenges, echoed by the most recent first quarter 2024 analysis from Parallelle Finance, a GLI research consultancy.
While the data set was not clearly defined in the FT article, statistics from Parallelle Finance show that as of March 31 this year 14 per cent of tracked gender lens equity funds had outperformed and 17 per cent performed in line.
Why is gender underperformance singled out in your article? Like any financial strategy, there will be a spectrum of at/over/under performance. Is it simply that lenses like gender and sustainability are subject to greater scrutiny?
Amid significant social, environmental and political shifts there is ample evidence that integrating a gender lens produces greater returns and impact.
Sana Kapadia
Chief Catalyst, Heading for Change, Dubai, UAE
