How does gender matter for today’s investing?

Gender diversity is a sustainable investment theme which spans across the social and governance pillars of the ESG investment landscape. In this publication we describe how the index tracked by our ETF aims to align to the Gender theme by selecting 100 companies which show a strong commitment to sustainability and gender equality.

Gender-diverse companies are identified using Equileap Research, which scores companies across 19 metrics which are broadly centered around four themes: gender balance in leadership and workforce, commitment to women’s empowerment, policies promoting gender equality, and equal compensation and work/life balance.

The index construction follows a multi-step approach where, in addition to the above-mentioned Gender Equality criteria, some business activity exclusion and liquidity criteria are applied. This ensures that, while being aligned to the gender-theme, the portfolio does not select companies that are involved in controversial activities.

After these selection criteria are applied, the constituents of the gender index are equally-weighted index assigning a 1% weight to each security, and the index is rebalanced annually and reviewed quarterly.

As clearly shown in the Equileap Global Report 2023, among the 3,787 publicly listed companies from 23 markets that are analyzed, companies in certain countries or sectors tend to overall rank better than their peers. For our portfolio, this leads to certain differences in country weights with countries such as U.S. and Japan that are identified as laggards, while Australia and some other European countries (e.g. France, Spain, Italy and UK) are identified as leaders and overweighted. In a similar fashion, some sectors like Financials are overweighted because this sector has, on average, very good Equileap scores. On the other hand, the IT sector on average performs poorly in terms of Gender scores, and therefore is underweighted.

Given these country and sector differences, it is interesting to highlight how the Gender Equality Index returns have been in line with the returns offered by the MSCI World in the period from August 2012 until October 2023.

This means that investors can now directly invest in this theme with the UBS Gender Equality ETF, aligning their investment with their values without substantially changing their risk-returns profile.