Lyxor launches Europe’s first gender equality ETF

Nov 7th, 2017 | By | Category: Equities

Lyxor has launched the Lyxor Gender Equality ETF (ELLE FP), Europe’s first ETF to focus on companies leading the field in gender equality.

Lyxor Gender Equality etf

To celebrate the launch of ELLE, members of Lyxor were invited to ring the Euronext opening bell on Monday 6 November 2017.

Developed in partnership with index provider Solactive, and backed by analytics powered by gender equality foundation Equileap, the fund marks another step in the growth of socially responsible investing in Europe.

Commenting on the launch, Clarisse Djabbari, deputy head of Lyxor ETFs & indexing, said: “This ETF marks an important step in our progress towards a complete range of environmental, social and governance based investment products.

“We are the only provider in Europe to offer ETFs on four of the [United Nation’s] Sustainable Development Goals: gender, water, new energy, and climate change.”

The ETF is linked to the Equileap Global Gender Equality Index, an index of 150 stocks based on Equileap’s global database covering more than 3,000 companies in 23 developed market countries. Each company has a market capitalisation of at least $2 billion and an average daily value traded of at least $5 million.

To refine the selection to just 150 companies, the index selects the highest ranked firms according to Equileap’s Gender Scorecard, a 19-criteria methodology inspired by the UN Women’s Empowerment Principles. Key criteria for selection are gender balance, equal compensation, work-life balance, policies promoting gender equality, transparency, and accountability. Index holdings are equally weighted and re-balanced annually.

Diana van Maasdijk, CEO at Equileap, commented: “Building our database and ranking over 3000 companies on 19 criteria was a first step towards transparency – you can’t change what you can’t see. Having investment vehicles tied to our indices is a second step towards change – a tool not only helping responsible investors, but also encouraging companies to make a difference.“

Djabbari added: “Lyxor is proud to be licensing this index, and doing our bit to help accelerate progress towards gender equality. By channelling investment towards the 150 companies that lead the field according to Equileap’s ranking, we can encourage others to embrace equality, and move society forward. It’s not just good for society though, companies embracing equality tend to perform better too.

Almost half of the companies in the index are listed in the US, which currently has an index weight of 46.8%. The UK accounts for 11.6%,  followed by Australia (10.2%) and France (8.6%). The largest sector exposures are financials (19.9%), consumer discretionary (13.1%), health care (10.1%) and information technology (9.3%).

The company topping Equileap’s Gender Scorecard is French cosmetics company L’Oreal, while other well-known firms on the constituent list include Sanofi, Diageo, Merck, GlaxoSmithKline, Adobe, Marks and Spencer, Novartis, Bank of America, and Nike.

Research suggests equality can be good for performance by promoting loyalty from customers, ensuring employees feel valued, and helping to attract new talent. Using back-tested data from 30 September 2011, the index has returned 10.8% per annum with an annualized standard deviation of 13.4%.

Source: Solactive.

The fund is listed on Euronext Paris with a total expense ratio (TER) of 0.35%.

ELLE is the second ETF to utilize a Solactive-Equileap co-branded index since Solactive unveiled its gender equality index family in April of this year. The Evolve North American Gender Diversity Index ETF (HERS) was launched in September 2017, and tracks the Solactive Equileap North American Gender Equality Index. The index also harnesses Equileap’s proprietary data analytics, and provides exposure to companies listed in Canada or the US.

Timo Pfeiffer, head of research at Solactive, commented: “The launch of the Lyxor Gender Equality ETF is another achievement for the Equileap family of gender-equality indices designed by Solactive. Thanks to this gender lens methodology, investors can integrate gender balance into their portfolios, which is an increasingly important theme in finance and the business world.”

ELLE will be hoping to replicate the success of State Street Global Investors’ SPDR SSGA Gender Diversity Index ETF (NYSE: SHE), which has accumulated over $350m in assets under management since its launch on International Women’s Day on 8 March 2016.

The ETF tracks the SSGA Gender Diversity Index, which currently comprises 169 stocks from the largest 1,000 listed companies in the US, based on the number of women at the CEO, board or senior leadership levels. SHE’s TER is 0.20%.

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