ETFs ring the bell for gender equality

Mar 8th, 2018 | By | Category: ETF and Index News

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In events co-coordinated by Women in ETFs, 63 stock exchanges around the world hosted bell ringing ceremonies to mark International Women’s Day and to help advance the cause of gender equality and women’s empowerment.

The Irish Stock Exchange rings the bell for gender equality.

The Irish Stock Exchange rings the bell for gender equality.

ETF issuers have shown they are keen to play their part with a number of ETFs being launched in recent years that select stocks based on gender equality screening in some form.

While the strategy is relatively new in Europe – at least in an ETF format – it has been available in the US for a couple of years now.

Lyxor, UBS and SSGA are three ETF issuers championing the cause, and their gender equality ETFs (profiled below) have collectively accumulated more than $420 million in assets.

Lyxor Global Gender Equality ETF (ELLE FP)

ELLE was the first ETF in Europe to focus on companies that pave the way in gender equality. The fund, which trades in euros, was first listed on Euronext Paris in November 2017 before cross-listing to the London Stock Exchange in mid-February. On LSE, the fund trades in pounds sterling under the ticker GEND LN.

The ETF tracks the Solactive Equileap Global Gender Equality Net Total Return Index, an equally weighted index of 150 companies from around the world that score highly for gender equality according to 19 criteria defined by Equileap (a gender equality research house).

To be included in the index, constituents must pass standard liquidity criteria as well as a basic ESG (Environmental, social and governance) screen. Companies involved in weapons, gambling and tobacco, and those flagged as unsuitable by the Norwegian Ethics Council – an administrative body evaluating the ethical suitability of companies for the Norwegian Government Pension Fund – are excluded.

The index has returned 13.0% per annum with an annualized volatility of 13.2%. The US represents the highest country weighting at 46.7%, followed by Australia at 9.8%. The UK comes in third at 9.6%.

The fund has a low total expense ratio (TER) at 0.20% (reduced from 0.35% since launch). It has assets under management (AUM) of $60m.

UBS Global Gender Equality ETF (GENDER SW)

GENDER also tracks a Solactive Equileap index, but one that holds a narrower selection of stocks. The Solactive Equileap Global Gender Equality 100 Leaders Index selects 100 companies from a universe of over 3,000 firms across 23 developed market countries.

The methodology includes a similar ESG screening as GEND before moving onto its constituent selection. The index will always select a minimum of 30 US-listed stocks, choosing the firms with the highest Equileap score. Then the next highest-scoring US stocks will be added, but only if they score above a certain Equileap score, up to maximum 50 US stocks in total. Finally, the highest-scoring companies from the rest of the world will be added to total 100 stocks in the composition.

The weighting by country is similar to the broader Solactive index described above. The highest weighting is to the US at 48.9%, followed by Australia (9.8%) and France (9.6%).

GENDER is listed on SIX Swiss Exchange and Borsa Italiana in euros. It is slightly more expensive than Lyxor’s gender ETF with a TER of 0.30%. The fund launched in January and currently has AUM of $40m.

SPDR SSGA Gender Diversity Index ETF (SHE US)

State Street Global Advisors launched SHE on International Women’s Day two years ago, and the fund’s AUM has since grown to over $320m. 

The ETF tracks an in-house index of US large-cap companies with a relatively high proportion of women in executive and director positions. This index currently comprises 169 stocks from the largest 1,000 companies in the US, based on the number of women at the CEO, board or senior leadership levels. The top two sectors are technology (19.7%) and healthcare (15.6%).

Constituents include well-known names such as Pfizer (5.6%), Coca Cola (4.9%), Mastercard (4.4%), PepsiCo (4.1%) and International Business Machines Corporation (3.9%).

Since launch two years ago, the fund has returned 18.6% per annum. It is listed on NYSE Arca and has a TER of 0.20%.

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