If you want to make sure money you invest supports companies that have good gender diversity policies, or those that are founded or led by women, what’s available? How do funds take gender diversity into account or support women in business? Find out about female investment funds.
Female investment funds
In the United States there’s quite a market for female investment funds, but there are fewer in the UK. However, this week, one of the biggest investment companies in the UK, Legal and General Investment Management launched a GIRL fund. The fund will invest in companies that score well on gender diversity. Here’s a guide to some of the female investment funds available.
L&G Future World Gender in Leadership UK Index Fund (GIRL fund).
What type of fund is it?
It’s a tracker or passive fund. That means that it invests in companies that make up a stock market index. In this case, it’s the index of the 350 biggest companies in the UK. However, unlike an ordinary tracker fund that would just invest money to reflect the FTSE 350 index, Legal and General Investment Management will invest more money in companies that score well on gender diversity and less in companies that don’t.
The fund will also vote against the board of companies where women make up fewer than 25% of board members.
SAVVY TIP: When someone invests in a company (by buying its shares) they also have the right to vote on important issues at annual general meetings (AGMs). Big investment funds that own a significant proportion of a company can have a big effect on how a company is run.
Helena Morrissey is Head of Personal Investing at LGIM and the fund is her brainchild: “Gender inequality is one of the key issues of our time – and one that generates so much frustration. Rather than feeling trapped or despondent, let’s do something about it. I’m excited about the launch of the GIRL Fund, which empowers us all to use our money to help companies to progress.”
What does the fund invest in?
The fund gives each of the 350 companies that make up the index a score of 0 – 100, based on four measures of gender diversity:
- The percentage of women on the board of directors
- The percentage of women who are executives
- The percentage of women who are managers
- The percentage of women who are in the workforce.
For each measure, if a company has over 30% of women, they’ll get a higher gender diversity score. The fund will invest more money in companies with a higher score and less money in companies with a lower score. Gender pay gap data may also be added in the future.
SAVVY TIP: This fund also invests more money in companies that adopt sustainable and socially responsible policies. This means it already measures and rates companies that take climate change into account.
What does the fund charge? It charges 0.5% as an ongoing charges figure. This is higher than some index tracking funds, but not as high as others. However, without trying to do a sales pitch for Legal and General Investment Management, it’s not a fund that just tracks an existing index. It’s also measuring how companies rank for the gender scores I’ve outlined above. And that takes a bit more work.
Who can invest? Large investment funds (such as pension funds etc) can invest, as can individual investors. The minimum amount you can invest at the moment is £500, although that will come down in the future.
You can read more about the LGIM GIRL fund on the LGIM blog section of its website.
US-based female focused funds
I’m not aware of any other UK-based funds that focus on gender diversity in the way this fund will. However, there are a couple of funds in the United States that invest more in companies that have a good balance of women in senior roles and/or have policies that advance women in their organisation.
Ellevest Impact is based in the US and invests half of investors’ money in companies that ‘advance’ women. Companies must have a higher percentage of female leaders and have policies in place. It’s aimed at individual investors.
There is also a US-based fund that focuses on gender diversity, that’s been going since 2006. It currently has over $200 million invested in companies that are doing the most for gender diversity at board and executive management level. It’s called the PAX Ellevate Global Women’s Leadership Fund.
SAVVY TIP: You can only invest in this fund if you have at least $250,000 to invest. It’s aimed at other investment funds rather than individual investors.
Funds supporting women in business
Other female focused investment funds in the UK tend to be those that fund female-led startups. I’m listing a few below. Not all of these are open to investment at the moment and most are risky funds by their nature. The reason they’re riskier is that many startups and young companies fail. They are not generally aimed at or suitable for novice investors.
All Bright EIS Fund. This fund is currently closed but has invested in 500 female-led startups.
Merian Ventures Based in the US and London. It is a venture capital fund that invests in female-led businesses in the areas of cyber, artificial intelligenc (AI), machine learning (ML) and consumer technology.
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