Many investors, including some professionals and advisors, look to invest with a moral compass. Issuers of exchange traded funds (ETFs) have been meeting that demand with an increasing number of exchange traded funds that address various issues.
Time will ultimately tell how successful these ETFs end up being, but investors do not need to wait to gauge the success of the SPDR Gender Diversity Index ETF (SHE) . SHE debuted in March and is already home to more than $280 million in assets under management, easily making it one of the most successful new ETFs to come to market this year.
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SHE seeks to track the performance of the SSGA Gender Diversity Index, which comprises listed U.S. large capitalization companies with the highest levels within their sectors of gender diversity on their boards of directors and in their senior leadership.
According to a 2015 MSCI study that explored global trends in gender diversity on corporate boards between December 2009 and August 2015, companies with at least three female board members outperformed others in overall return on equity by more than 36 percent.
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“The fund’s goal is to achieve market-rate returns by investing in US companies that recognize the value of gender diversity and do their part to ensure that women are well-represented on their boards of directors and in management. As of May, about 150 companies were included in the ETF, and returns have closely tracked the S&P 500 index,” according to a Seeking Alpha analysis of SHE.
In the past two years, there have been significant developments in Environmental, Social and Governance (ESG) index-based investing. S&P Global Market Intelligence thinks that a more modest global economic expectation, a focus on climate changes and the gender pay-gap disparity and a new generation of investors comfortable with alternatively-weighted passive strategies plays a role.
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“The SHE ETF is hardly the first to embrace impact investing, but its growth has been phenomenal. Since launching in May, the fund has attracted $270 million in assets – more than any other ETF that debuted in 2016, according to Bloomberg. In a first for a State Street ETF, SHE also has a charitable component. The charitable fund, SHE Gives Back, donates money to organizations that counter sexism directed at girls in early childhood who want to become leaders,” according to Seeking Alpha.
For more information on all the latest ETF launches, visit our new ETFs category. SPDR Gender Diversity Index ETF
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.