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Frankfurt-based index provider Solactive has unveiled a new family of indices tracking leading companies in the field of gender equality. Consisting of three indices offering investors different geographic exposures (Europe, US or global) to the same gender lens methodology, the indices may form the basis for future investment products such as ETFs.
The launch is the result of a collaboration between Solactive and Equileap, an organisation aiming to accelerate progress towards gender equality in the workplace. Equileap gathered data on over 3000 publicly-listed companies in 23 countries and ranked them according to 19 gender equality criteria covering leadership, career development, work-life balance, equal pay, family leave, as well as health & safety.
Solactive designed the indices based on standard liquidity criteria, as well as a light environmental, social and governance (ESG) and an in-depth gender screenings both provided by Equileap.
The Europe and US indices select 75 of the top ranking companies, according to Equileap’s gender equality evaluation, whereas the global version selects 150 components. All indices are weighted equally and rebalanced annually.
Steffen Scheuble, CEO of Solactive AG commented: “We are proud to be working alongside Equileap on these gender-focused indices including their unique, well researched and outstanding ratings. Gender equality has always been a core value for Solactive and we believe there is a growing market for this type of social impact financial product.”
Diana van Maasdijk, CEO and Co-Founder of Equileap, added: “It is the first time that an organization has built such a comprehensive corporate database on gender equality. We are convinced the launch of these indices will encourage companies and investors waking up to the importance of gender balance.”
The indices within the Solactive/Equileap Gender Equality Index family are presented below:
Solactive Equileap Europe Gender Equality Index
Solactive Equileap US Gender Equality Index
Solactive Equileap Global Gender Equality Index
The three indices are calculated as gross total return, price return and net total return indices. The European index is denominated in euros, while the US and global indices are denominated in dollars.
Studies have repeatedly found that gender equality can be associated with better performance. For instance, a report by the World Economic Forum shows that there is a correlation between gender equality and economic variables such as countries’ GDP per capita and their level of competitiveness. Similarly, at the corporate level, there is evidence that gender diverse companies are more likely to exhibit higher financial returns, possibly due to diverse leadership teams leading to more refined results, broader insight into economic behaviour and consumer choices, improved corporate governance and better use of the talent pool.
US investors looking for an existing investment product which utilizes a gender equality screen may wish to consider the SPDR SSGA Gender Diversity Index ETF (NYSE: SHE). The underlying SSGA Gender Diversity Index replicates the performance of the highest ranked US companies, by their ratio of women in the top tiers, across 10 sectors whose combined sector market capitalization equals 10%. The index currently comprises 184 stocks, each with at least one woman on its board or as CEO. The index is rebalanced annually on the last business day in June.
Launched on International Women’s Day (8 March) in 2016, the fund has grown to $288 million in assets under management. It has a total expense ratio of 0.20%.