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Gender-focused funds on rise but data scarce

It remains difficult to find gender data related to profit and loss at a company, according to AXA IM

Funds focused on social and governance issues are not given the same amount of attention as environmental funds and data needs to be improved, according to AXA Investment Managers.

AXA IM fund manager Anne Tolmunen told Expert Investor that while there was a broad push by the industry to increase data and granularity, there were still gaps and a lack of visibility especially on disclosure in emerging markets.

Tolmunen runs AXA’s Framlington Women Empowerment fund, which was launched in February 2017.

A 2015 McKinsey & Co report found global GDP could be increased by $12trn (€10.8trn) if gender inequality was improved by 2025, and this number could more than double to $28trn if full equality was achieved. However, gender-focused funds remain few and far between.

According to Morningstar, there are currently only three gender-focused funds domiciled in Luxembourg or Ireland – although this figure excludes funds that do not have gender diversity as the sole focus.

The most established fund, RobecoSAM Gender Equality Impact C has beat the MSCI All World index over the one month, one year, and three year returns to 30 April 2019.

Most notably, the fund returned 50.8% over the three years compared to 42.5% for the index.

According to its factsheet, the fund had its highest sector allocation towards IT (19.6%), followed by healthcare (16.2%), financials (15.2%), consumer staples (11.8%), and industrials (10.7%).

The largest geographical weighting went to the US (62.7%), followed by the UK (8.4%), Germany (8.2%), France (4.2%), and Switzerland (3.6%).

Fund One month return to 30 April 2019 One year return to 30 April 2019 Three year return to 30 April 2019
RobecoSAM Gender Equality Impact C 4.5% 20.9% 50.8%
AXA World Funds Framlington Women Empowerment G Cap 4.1% 23.2% N/A
Nordea 1 – Global Gender Diversity BI 3.6% N/A N/A
MSCI All World Index 3.6% 16.4% 42.5%

Source: Morningstar

Inadequate data

Tolmunen said while the AXA Framlington Women Empowerment fund – which had $55.7m (€49.9m) AUM end May – had garnered interest over the last two years the challenge was finding adequate gender disclosure from companies.

She said it was generally easy to find information on the gender balance on boards and executive teams, but further granularity was difficult to find.

“It’s really rare that we can find the proportion of women involved in profit and loss activities as women tend to be in more support functions,” Tolmunen said.

“It could be that you’ve got 40% women in the workforce and in management 40% are women who are in HR and communications but only 10% in other departments the company derives its profit and loss and understanding this distinction is important.”

While many firms said they had flexibility and parental leave policies it did not give insight into the actual culture of the firm.

“Currently we can only get the gender pay gap data point in the UK and while this is a great step forward it doesn’t give you a full picture,” Tomunen said.

“Ideally it would tell you how much the gap is in similar roles, seniority, and level of responsibility. There should not be these obvious gaps in data.”

Nordea’s Global Gender Diversity BI fund’s co-manager, Julie Bech, said 40% of firms did not report gender data but this could change through government and shareholder pressure.

“We also hope data and research will extend past gender into other areas of diversity providing more insight and direction for investment strategies,” Bech said.

Tolmunen noted the best way to differentiate firms that walked the talk and those that did not was through qualitative assessments by having discussions with management.

“By talking to management it’s easy to see if it’s a strategic priority or not but even the best in class have a lot of work to do,” she said.

“Some are further along that path and have been doing it for many years, but it is a complex reality to tackle. There is not a single bullet for that challenge but frankly I want to see some results, hence I set the bar at firms that have 20% women at the board.”

Nordea’s Global Gender Diversity fund views a company as gender diverse if women represent at least one third of its upper level management.

“If a company shows a positive trend in increasing and promoting diversity, it can also be included in the universe. We will not consider ‘female only’ companies, as we value diversity,” Bech said.

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