Investors often hear about the virtues of portfolio diversification, but there are other avenues to diversity that can potentially generate positive outcomes. That includes gender diversity, a theme that can be accessed via the SPDR SSGA Gender Diversity Index ETF SHE.
The SPDR SSGA Gender Diversity Index ETF, which follows the SSGA Gender Diversity Index, is one of a growing number of exchange-traded funds that extol some type of socially responsible theme. However, there are some important areas in which SHE is separating itself from the pack.
How SHE Stands Apart
For example, SHE debuted in early March and is already home to more than $274 million in assets under management, easily making it one of the most successful ETFs to come to market this year. More important than that superficial statistic is the fact that SHE has returned nearly 7 percent since its debut.
Speaking of returns, some data points suggest SHE has the potential to deliver for investors over the long haul.
“A recent McKinsey report found that companies in the top quartile for gender diversity were 15% more likely to have financial returns above their national industry median,” said State Street Vice President David Mazza in a recent note.
Mazza pointed out that over the past five years, the S&P 500 member firms with the highest percentage of female board members “outperformed the broader index by 300 basis points (bps) per year” while topping the 20 S&P 500 companies with the lowest percentage of female board members by an average of 500 basis points per year.
“According to a 2015 MSCI study that explored global trends in gender diversity on corporate boards between December 2009 and August 2015, companies with at least three female board members outperformed others in overall return on equity by more than 36 percent. Despite these findings, American women account for an average of just 16 percent of the members of executive team,” State Street said when SHE debuted.
Healthcare and technology stocks combine for 36 percent of SHE's weight while industrials and consumer staples combine for over a quarter of the ETF's weight. If SHE is an accurate indicator, the energy, materials and utilities, merely a combined 12.9 percent of the fund, have some work to do in terms of gender diversity.
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