An Index Fund That Invests in Strong Businesswomen

A blog about business and economics.
June 6 2014 10:05 AM

An Index Fund That Invests in Strong Businesswomen

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Investing in more like her is something to smile about.

Photo by Eric Piermont/AFP/Getty Images

This story originally appeared on Inc

Plenty of business owners have lofty goals beyond just making money. Some want to generate green energy to combat climate change. Others want to fix health care by creating affordable options for consumers. Yet others have important social goals, like ending racial discrimination, or advancing women's issues.

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In that last camp is Sallie Krawcheck, the Bank of America and Citigroup executive-turned-entrepreneur. In 2013 Krawcheck purchased the women's network 85 Broads, changing the name to Ellevate.

Now Krawcheck is launching an index fund, called the Pax Ellevate Global Women's Index Fund, which will invest in companies that have a strong commitment to women. It is, according to Krawcheck, the first fund to have responsibility toward women as its primary goal. (A spokeswoman for Pax said it has merged an older, much smaller index fund with similar objectives into the new fund.)*

In concept, the fund is not that different from others that have been around for decades, such as the Gabelli social index funds, which invest in socially responsible companies committed to diversity, the environment, or good corporate governance.

“Research indicates that companies with more women in senior management have higher returns on capital, lower volatility, greater client focus, increased innovation and greater long-term orientation," Krawcheck says on the website promoting the funds. "As a result, I believe they should also deliver better stockholder returns over time.”

Krawcheck will operate her fund through Pax World Investments, a socially responsible investment company. What's more, Ellevate will reportedly use a portion of membership fees from its network of high-profile, high-power women to invest in its own index.

Here's a description of the companies the fund will invest in, from its promotional materials:

  • Representation by women on the board of directors
  • Representation of women in executive management
  • Woman CFOs
  • Woman CEOs
  • Whether they are signatories to the Women's Empowerment Principles, a joint initiative of the UN Global Compact and UN Women.

With those criteria in mind, about 400 companies emerge as possible investment candidates for the index, the fund website says. (Among the signers to the Women's Empowerment Principles, and hence investment possibilities, are Alcoa, Microsoft, and Pepsico.)That's a pretty decent number of companies whose policies support women, and hopefully that number will grow as attention to the index fund, and women's issues in business and elsewhere, increases.

Update June 8, 2014: This story has been updated to clarify that Krawcheck's fund is the product of a merger with an older, smaller index fund with similar objectives to the newly launched venture.

Jeremy Quittner is a staff writer for Inc.

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