9 minute read
An Advisor’s Guide To Gender And Racial Equality Funds
Here’s the inside scoop on funds that are of interest to clients who want their advisor to create an environmental, social and governance investment portfolio. • Anders Skagerberg
Are your clients interested in aligning their investments and values in support of gender or racial equality? Several funds launched recently that claim to promote diversity, but which of them are a good fit for your clients?
Financial planning clients are expressing interest in aligning their investments with their values. Racial and gender equality issues are at the forefront of this movement.
For advisors who are crafting an environmental, social and governance investment portfolio for their clients, it is essential to have the inside scoop on which funds are of interest to clients.
We have counted seven funds that target gender and racial diversity, managing nearly $1.4 billion in assets. Some of these funds can be an excellent way to align your client’s investments and values.
Investing In Women’s Leadership
The COVID-19 pandemic had a greater impact on women than it did on men. Many women had to take on more child care responsibilities, reduce their work hours or drop out of the workforce entirely. So investing in companies that integrate women well might be a top priority for your female clients when developing an investment portfolio.
Three exchange-traded funds — SHE, WOMN and FDWM — and three mutual funds — Pax Ellevate Global Women’s Leadership Fund (PXWIX), Fidelity Women’s Leadership Fund (FWOMX) and Glenmede Women in Leadership Fund (GWILX) — invest in women’s leadership.
However, two of these funds — GWILX and FDWM — are tiny, with less than $30 million in assets.
These funds typically select stocks based on the proportion of women in top management and director ranks. Pax Ellevate’s manager, Pax World Funds, also has engaged with companies on gender diversity issues.
Investing In Racial Justice
In the aftermath of George Floyd’s death, racial justice investing also has gained significant ground. If your clients are interested in ESG investing, racial justice investing may be at the top of their list.
Launched in 2018, the Impact Shares NAACP Minority Empowerment ETF (NACP) is the only racial justice ETF.
Pax Ellevate Global Women’s Leadership Fund
Pax Ellevate is the largest and oldest gender equality mutual fund in the U.S. Launched in 1993 by ESG boutique Pax World, the fund invests in companies that advance women through gender-diverse boards and senior leadership teams. The fund was developed in partnership with Sallie Krawcheck. She is a Wall Street veteran who now runs Ellevest, a robo-advisor focusing on women’s investment needs.
Pax World selects stocks from MSCI World, a global stock index. To be included, companies must have an above-average number of women in top management roles and on the board of directors. Pax
Fund Name Ticker Assets ($m)
Expense Ratio
Pax Ellevate Global Women’s Leadership Fund PXWIX 909.1 0.53% Fidelity® Women’s Leadership Fund FWOMX 128.7 0.90% Glenmede Women in Leadership Fund GWILX 27.3 0.85% SPDR SSGA Gender Diversity Index ETF SHE 267.5 0.20% Impact Shares NAACP Minority Empowerment ETF NACP 32.4 0.49% Impact Shares YWCA Women’s Empowerment ETF WOMN 30.3 0.75% Fidelity Women’s Leadership ETF FDWM 2.0 0.59%
Total
ETF.com, Morningstar, Data as of 7/28/2021 1397.3
World also screens out oil and gas, weapons and tobacco companies.
The fund holds more than 400 global stocks — including Microsoft, Amazon and Estee Lauder — as its top holdings. Two-thirds of the portfolio is allocated to U.S. stocks. The rest is in international — primarily European — stocks.
The fund manager, Pax World, has always focused on socially responsible investing. Pax World files pro-diversity shareholder resolutions, including gender-pay equity at Oracle and Mastercard. The fund’s performance has been in line with the MSCI World index, which tracks global stocks.
SPDR SSGA Gender Diversity Index ETF
Launched in 2016, SHE invests in largecap U.S. companies with a high percentage of women who are executives or directors. State Street famously advertised this fund by commissioning the Fearless Girl statue in Manhattan’s Financial District
The fund picks stocks from the top 1,000 U.S. companies and weighs them based on market cap. Companies in the top 10% on gender equality metrics in each sector are included. Each stock is capped at 5% of the fund.
SHE has 165 holdings, with around 27% of the fund invested in tech. The top three holdings are Visa, PayPal and Walt Disney.
SHE is relatively inexpensive, with only a 0.20% expense ratio. The caveat is that the fund’s manager, State Street, has not consistently voted in favor of pro-gender equality shareholder resolutions. For example, Morningstar pointed out that between 2016 and 2018, State Street voted in favor of only 19% of the gender-equality resolutions that came before it. However, large asset managers, including State Street, are increasingly supporting ESG shareholder resolutions.
Fidelity Women’s Leadership Fund
Started by Fidelity in 2019, Fidelity Women’s Leadership Fund is an actively managed mutual fund that invests in large-cap and mid-cap U.S. stocks. The fund is managed by a woman, Nicole A. Connolly. She previously invested in natural resources, utilities, technology and emerging markets.
To be included in the fund, companies must have:
» Women in the key leadership roles, or; » At least one-third of the board positions held by women, or;
» Policies (such as parental leave) aimed at attracting, retaining, and promoting women (such as parental leave).
The fund has around 140 holdings, including Microsoft, Disney, Accenture, Anthem and Nasdaq. Although the fund has beaten its benchmark, the Russell 3000, since inception, it costs more than other gender equality funds.
NACP — The NAACP Minority Empowerment ETF
NACP is the first and only ETF to promote racial equality. It’s a small fund investing in large-cap and mid-cap U.S. stocks. It is also the first fund launched by Impact Shares, a provider of socially conscious ETFs.
The stocks in the fund are selected using the NAACP‘s scoring criteria. These criteria include board diversity, anti-discrimination policies, community engagement and diversity programs. The fund maximizes exposure to the highest-scoring companies while mimicking the risk-return characteristics of the broad market.
The fund owns around 190 stocks and has about 34% of its assets in technology companies. Its top investments are Apple, Microsoft and NVIDIA.
In addition to NACP, there are other ways to give clients exposure to racial justice investments. For example, clients could lend to community development financial institutions. CDFIs lend to underserved communities, including people of color.
Impact Shares YWCA Women’s Empowerment ETF
Launched in 2018, WOMN tracks an index of large-cap and mid-cap U.S. stocks that score high on gender diversity. To come up with the scores, the WOMN’s index gives each company a rating for gender balance in leadership and workforce, equal compensation and work-life balance, and policies promoting gender equality.
The algorithm then selects about 200 stocks with the highest scores while maintaining a marketlike risk and return. Companies involved in ethical controversies and industries such as weapons, gambling and tobacco are excluded.
WOMN is a small fund with just over $30 million in assets under management.
The current movement for investors to align their money with their values is well underway and is likely to accelerate as time goes on. This is an excellent opportunity for financial advisors to differentiate themselves and to add additional value. Clients want a unique financial plan that can deliver on their goals while aligning their values, beliefs and investments. Armed with the right knowledge, financial advisors can deliver just that.
Anders Skagerberg, CFP, has worked as a financial advisor for high-net-worth families and a director of financial planning operations for Facet Wealth. Currently, he is a tax expert and a financial writer. He may be contacted at anders.skagerberg@innfeedback.com.
Stress: Are You Teflon Or Velcro?
Why are some people more resilient in the face of stress or trauma than others? It depends on your response, said Dr. Samantha Boardman, author of Everyday Vitality: Turning Stress Into Strength.
Boardman said some people are like Teflon — stress doesn’t stick to them. Others are more like Velcro — stress attaches to them and builds up over time.
Stressful moments — everyday annoyances – can raise blood pressure and lead to unhealthy ways of coping, such as overeating or lashing out at others.
Boardman recommended dealing with stress by using three C’s: Connecting with others, Contributing to something beyond yourself,
and feeling Challenged in some way. She said these activities create an uplift and “build an armor around you so when these little stressors happen, they’re much less likely to get under your skin.”
TRY TAI CHI
ere’s a reason why tai chi has been popular for centuries. e traditional Chinese wellness practice carries a number of health benefits, including helping you maintain a healthy weight and blood pressure, improving heart health and immune function, and lowering the risk for falls.
Researchers found those who practiced tai chi three times a week for 12 weeks reduced waist circumference, body weight and high-density lipoprotein cholesterol.
Tai chi also helped with pain management for those who suffered from fibromyalgia, musculoskeletal pain and post-traumatic stress disorder.
And tai chi improves balance and muscle strength. ose who practiced tai chi for 25 minutes a day over six weeks reported increased mobility, balance and leg strength. include plenty of berries, root vegetables and wild game.
Researchers say the benefits of the Nordic diet are similar to those of the Mediterranean diet: reduced inflammation, lowers cholesterol and improves blood pressure levels.
WHAT IS THE NORDIC DIET?
e Nordic diet is the latest eating trend to generate buzz. But what is it, and should you adopt it? e Nordic diet was developed in 2004 and focuses on seasonal, local, organic and sustainably sourced whole foods that are traditionally eaten in the Nordic region — Denmark, Finland, Norway, Iceland and Sweden.
If you want to eat the way they do in the Nordic countries, plan to consume whole grains (e.g., barley, rye and oats), fruits, vegetables, legumes (such as beans and peas), fatty fish (salmon and herring), low-
fat dairy and canola oil. e menu will
QUOTABLE
Over the pandemic, we did see increases of body image anxiety.
— Dr. Janis Whitlock, psychologist
MORE EXERCISE + LESS TV = BETTER SLEEP
Being physically active and spending fewer hours watching TV could substantially lower your risk of developing obstructive sleep apnea, according to the European Respiratory Journal.
Data showed those who exercised daily were 54% less likely to develop the sleep condition. Sitting and watching TV especially raised the risk of developing sleep apnea, with those who spent more than four hours daily in front of the screen increasing their risk of developing the sleep disorder by 78%.
One of the main reasons why TV viewing was problematic, researchers said, was that watching your favorite shows usually is associated with unhealthy behaviors such as excessive snacking.
DID YOU KNOW ?
