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How to Invest in ETFs Backed by Women Power

Sweta Killa
TC PipeLines (TCP) is seeing favorable earnings estimate revision activity and has a positive Zacks Earnings ESP heading into earnings season.

Gender diversity is en vogue with the number of female corporate leaders going up. More female employees are taking the top positions in a number of companies. After dropping to 21 in 2016, the number of women CEOs on Fortune 500 increased more than 50% to a record 32 at the start of 2017.

However, the number declined to 27 as of Jan 2018 and will drop further down to 24 by April. Despite this, women hold 21% of board seats at S&P 500 companies per Catalyst, a group researching women and work.

Several researches show that the companies led by women have constantly outperformed the market. According to the analysis by the bank Nordea, companies with a woman in the chief executive or chairman role have performed far better than a major global index over the past eight years. The annualized returns for female-led firms, based on an equal weighting, was 25% since 2009, compared with just 11% for the broader market — the MSCI World Index (read: Top-Ranked Sector ETFs & Stocks From Top Industries).

Given the long history of outperformance, 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 couple of 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. Holding 169 stocks, it is moderately concentrated on the top firms as each account for less than 5.7% of assets. Pfizer PFE, Coca-Cola KO and Mastercard Inc. MA are top three holdings. From a sector look, information technology takes the largest share at 22.6%, followed by healthcare (16.9%), consumer staples (13.3%) and consumer discretionary (12.1%). The product has amassed $318.8 million in its asset base while trades in light volume of about 11,000 shares. It charges 20 bps in annual fees and has gained 10.3% over the past year (read: Tech ETFs & Stocks Surviving the Market Rout in February).

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 $36.7 million in its asset base and trades in a paltry volume of around 200 shares. Expense ratio comes in at 0.45%. The note is up 7.2% over the past year (see: all the Large Cap ETFs here).

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Pfizer Inc. (PFE) : Free Stock Analysis Report
Coca-Cola Company (The) (KO) : Free Stock Analysis Report
SPDR-SSGA GD (SHE): ETF Research Reports
BARCLY-WOMEN IL (WIL): ETF Research Reports
Mastercard Incorporated (MA) : Free Stock Analysis Report
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