Trending in the markets: ETFs led by women, focused on women
Investors interested in investing in female-led companies have opportunities to do so through ETFs
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Empowering women to thrive in leadership positions continues to be at the forefront of American businesses. This trend continues to expand to all facets of the U.S. economy, including investing and asset management.
One standout is Hypatia Capital, which has been focused on investing in women in leadership since 2007. At the helm is Patricia Lizarraga, managing partner of Hypatia Capital, based in New York. According to Lizarraga, the naming of the firm is based on a trailblazing female.
"We researched who was the first woman mathematician, and the first woman astronomer," she says. "They were the same person: Hypatia of Alexandria."
On Jan. 9, 2023, the firm launched Hypatia Women CEO ETF (WCEO).
"WCEO is, as far as we know, the only ETF investing in women CEOs as an investment strategy, and specifically isolating the Female Factor: 118 holdings include all publicly traded American companies with a female CEO, small to mega-cap. Industry neutral, equally weighted," Lizarraga tells FOX Business.
Hypatia Capital has been focused on investing in women in leadership since 2007. (iStock)
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In addition, Hypatia currently publishes the Hypatia Women Hedge Fund Index – powered by Wilshire.
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For investors who are interested in investing in female-led companies, this ETF is a vehicle to do this.
"The WCEO ETF allows all investors who believe in equality the ability to easily balance the domestic equities allocation of their portfolio for gender equality in CEO leadership," says Lizarraga. According to the World Economic Forum 2022 report, she says, it will take 132 years to reach gender equality in the world.
"You can’t change the world, but you can reach gender equality in your domestic equity allocation today," Lizarraga adds.
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Roxanna Islam, associate director of research with VettiFi, acknowledges that WCEO is actually the first ETF that focuses on companies led by a female CEO.
"These companies are expected to generate excess returns under the thesis that female CEOs may have extraordinary leadership capabilities to compensate for barriers to entry for females in high-ranking corporate positions," Islam tells FOX Business. "Up to 20% of its assets may be invested in companies with female board members, but the primary focus is female CEOs."
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Furthermore, there are a couple of other ETFs that focus more broadly on gender diversity, says Islam. She notes the SPDR MSCI Gender Diversity ETF (SHE) focuses on companies that are ranked by gender diversity ratios of female executives and board members. And, she says, the Impact Shares YWCA Women’s Empowerment ETF (WOMN) focuses on companies that qualify under certain gender diversity screens, including female CEOs/board members, but also equal compensation, work-life balance and other gender-diverse policies.
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"It’s interesting because these seem to be more ESG-focused relative to gender diversity, while WCEO seems more focused on the alpha that female CEOs can provide," Islam says.
"WCEO currently holds some (relatively) smaller stocks and has a significantly lower median market cap of $4.5 billion vs. SHE and WOMN, which have a higher weighting to mega-cap tech stocks and a median market cap within the $100 billion to $150 billion range," she continues. "I also think it’s worth noting that WCEO currently does not share any of its top 10 holdings with either SHE and WOMN."