ESG has become a forerunning investment principle for many institutional investment managers, with the belief that investments should be made in organizations that positively impact the world and also the idea that these ESG-focused companies will outperform their peers who do not place as much emphasis on ESG. Canadian investors who wish to gain exposure to companies that prioritize gender equality can do so using ETFs.

Gender Equality ETFs: An Introduction

Diversity, inclusion, and gender equality are social factors that companies have made a concerted effort to promote within their organizations. This is done through promoting diversity and gender equality in all levels of management – leading to increasing occurrences of women CEOs, women leadership teams, and women board seats in place of statistically/historically male-dominated positions.

Increasingly, investors are seeking companies that have made these social factors an emphasis and the ETF industry has responded by providing products to allow investors to gain exposure to these companies.

In general, these ETFs will seek to add companies that have reported higher levels of diversity, inclusion, personal development, and other social criteria. However, for gender equality ETFs in particular, they will likely seek a threshold of a minimum percentage of women in leadership positions. For example, they are only adding companies with at least 25% of their executives or board of directors comprised of women.

Why Invest in Gender Equality ETFs?

Responsible investing is a term that is being used much more for both institutional and retail investors alike. In the same way that consumers can make changes to the world by who they decide to buy products and services from, it is also true that investors can make positive changes to the world through the companies they choose to invest in.

Now, not everyone has the time to comb through annual reports and company filings to find companies prioritizing diversity, inclusion, and gender equality. However, various ETF providers have searched on behalf of investors and offer ETF products for investors who wish to invest in these companies.

There is controversy on behalf of shareholders who believe that investment decisions should be made regarding companies' profits and free cash flow generation potential. However, an argument can be made that companies that prioritize diversity, inclusion, and gender equality may outperform due to their leadership's diverse makeup, contributing to more unique and thoughtful decision-making processes that can contribute to the earnings potential of the companies. However, there is not enough empirical data to support this argument at this current stage.

Gender Equality ETFs: Examples

As mentioned, ETF providers can develop funds that allow investors to invest in liquid, transparent, and relatively low-cost companies which prioritize diversity and inclusion. Some examples of these ETFs that Canadians can invest in are:

MWMN – (Mackenzie Global Women’s Leadership ETF)

• AUM: $26.0M
• Expense Ratio: 0.61%
• YTD performance: -18.4%

RLDR – (RBC Vision Women’s Leadership MSCI Canada Index ETF)

• AUM: $13.4M
• Expense Ratio: 0.29%
• YTD performance: -9.4%

WOMN – (BMO Women in Leadership Fund ETF)

• AUM: $3.8M
• Expense Ratio: 0.40%
• YTD performance: -17.0%

Data for this article is as of July 12th, 2022.

Disclaimer: This article is limited to the dissemination of general information pertaining to investment strategies and financial planning and does not constitute an offer to issue or sell, or a solicitation of an offer to subscribe, buy, or acquire an interest in, any securities, financial instruments or other services, nor does it constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment.