How to Invest in Female CEOs - And Why you Should
3% of VC funding is directed towards women. Something needs to change
Female entrepreneurship is on the rise - and about time too. By 2021, women made up 43% of all business owners on a global scale. Yet whilst a lot of progress has been made getting women into leadership positions, female-led businesses are still underfunded - significantly underfund. In fact, only 3% of VC funding directed towards the women. This is a missed opportunity when female founders generate 35% higher return on investment than their male counterparts. Something needs to change.
The increase in awareness about investing responsibly carries with it the potential for more money to be channelled into inspiring projects led by women, helping to foster new businesses and create more opportunities for equality. By investing in these female-led enterprises we can ensure that our money is making a difference, fuelling growth and progress across a wide range of industries. So let's continue to rise up as conscious investors, supporting other women while creating positive impact with our wallets.
But what is the best way to do this and where should you start if you want to invest into promoting female leadership? The truth is, there are many ways and all of them will have an impact but not necessarily be as simple as purely investing into female CEOs.
Exchange Traded Funds (ETFs)
Investing with a purpose has never been easier. Exchange Traded Funds (ETFs) now offer the opportunity to access some of the world's leading female CEOs for investing purposes. As the ETF market has evolved, UBS, Lyxor and Blackrock (huge financial institutions) have all launched ETFs which track firms who are seen to be hitting gender equal targets. This is a great way to ease yourself into investing into female led businesses and an easy one too.
Why? Because Exchange Traded Funds are a great starting point for investing in female-led companies, all whilst being a low-cost option that offers diversification and allows individuals to benefit from investing in a whole range of companies. Instead of investing all your money in one stock, ETFs allow you to buy and sell a basket of stocks with just one trade on the exchange.
Tips to get started
To get started investing in female CEOs using ETFs, research factors such as the company’s management team, assets under management (AUM), and the potential risks and rewards associated with the ETF. Once you’ve identified a prospective fund, review the associated fees and compare them to other funds investing in similar sectors, to ensure you’re getting good value for your money. Finally, choose a purchasing platform that works best for you - whether it’s via an online broker or directly from a fund company - and keep an eye on your portfolio over time.
Actively managed funds
When it comes to actively managed funds, there are two key ways to invest into female CEOs. Firstly, there are a small handful of funds out there, such as the Barclays Women in Leadership, Fidelity Leadership Fund, BMO Women in Leadership Fund (along with a whole bunch of others) that actively seek out future female leaders in business. These are all great options when aiming to make a direct investment into female leadership across various industries, such as technology and healthcare.
Through these funds, you could be investing in projects directly aimed at improving the lives of women, or simply investing in well-managed companies that have positive track records on investing and social responsibility. Not only does investing in these funds send a message advocating for female CEOs, it also serves as an example of investing responsibly, resulting in improved performance, better work conditions and a level playing field between men and women.
Be at the forefront of change through your investments.
Tips to get started
With research, you can find information about performance metrics of different actively managed funds targeting female leadership and pick the one most suitable for your investing goals. Utilize websites such as Morningstar and Schwab to access comprehensive portfolios and performance reports on these funds. Additionally, you can talk to a finance advisor and see what they recommend when investing in an actively managed fund targeting female leadership. If you are looking to maximize growth and return on investing while making a difference, this is the perfect way to go.
1. Actively managed funds managed by women
You can also hunt down the funds that are managed by women. It may well be that their theme or target is unrelated to gender equality, but you’ll be supporting a fund that is run on female brainpower. (In case you forgot, women outperform men when it comes to making returns...just saying).
Not only can you trust that these funds are being well run, but research shows that investing in actively managed funds run by women often outperforms those run by men. So not only are you investing in female power, but you're investing wisely - it's a win-win!
2. Stocks
Another way to invest in women-led companies is through the trusty stocks and shares. With more and more companies stepping up to the plate, a lot of firms are now be measured on how many women they’re promoting, the percentage of women on their board and what their maternity and childcare policies are. This data will be published and ranked by major news outlets. Additionally, if the company is really backing their female led enterprise, they will no doubt be shouting about it on their website.
You can also invest in stocks that actually have female CEOs. The truth is, only 6% CEOs S&P 500 companies are women. And the picture isn't much better for the Fortune 500 companies where only 8% of CEOs are women. That's only 41 women CEOs across 500 chief executive roles. But that doesn't mean there isn't dozens of companies backed by female CEOs to invest in on the open stock exchange.
Below is a list of companies with female CEOs running the roost:
This list names all the women who currently hold CEO positions at S&P 500 companies, based on the January 2022 S&P 500 list.* Women currently hold 33 (6.6%) of CEO positions at those S&P 500 companies.
- Mary T. Barra, General Motors Company
- Corie Barry, Best Buy Co., Inc.
- Gina Boswell, Bath and Body Works, Inc.
- Gail K. Boudreaux, Elevance Health, Inc.
- Rosalind Brewer, Walgreen Boots Alliance, Inc.
- Michele Buck, The Hershey Company
- Debra A. Cafaro, Ventas, Inc.
- Safra A. Catz, Oracle Corporation
- Joanne Crevoiserat, Tapestry
- Jane Fraser, Citigroup, Inc.
- Adena T. Friedman, Nasdaq, Inc.
- Lynn J. Good, Duke Energy
- Tricia Griffith, The Progressive Corporation
- Susan Hardwick, American Water Works, Inc.
- Vicki Hollub, Occidental Petroleum Corporation
- Jennifer M. Johnson, Franklin Resources, Inc.
- Reshma Kewalramani, Vertex Pharmaceuticals, Inc.
- Christine A. Leahy, CDW Corporation
- Sarah London, Centene Corporation
- Karen S. Lynch, CVS Health Corporation
- Judy Marks, Otis Worldwide Corporation
- Phebe N. Novakovic, General Dynamics
- Lisa Palmer, Regency Centers Corporation
- Kristin Peck, Zoetis Inc.
- Linda Rendle, The Clorox Company
- Barbara Rentler, Ross Stores, Inc.
- Jennifer Rumsey, Cummings, Inc.
- Lori J. Ryerkerk, Celanese Corporation
- Lisa Su, Advanced Micro Devices, Inc.
- Julie Sweet, Accenture
- Carol B. Tomé, United Parcel Service, Inc.
- Jayshree V. Ullal, Arista Networks, Inc.
- Kathy J. Warden, Northrop Grumman Corporation
Tips to get started
Do some research, check out the ratings and indices for companies that are driving female led leadership and buy their shares directly. Doing a bit of research to checking out the ratings and indices will help you make a smart investing decision, giving your portfolio greater potential for positive returns.
A critical aspect of finding stocks with female CEOs also lies in doing your research too. Explore the company, what it stands for and the female CEO's history. You can also check out the executive team, and evaluate each woman's past success if you want to go the extra mile.
Don’t be afraid to ask for help from investing experts or advisors whose advice you trust. By doing so, you equip yourself with greater knowledge when you go buy your stocks. Additionally, investing communities are a great resource - seek out feedback and use it to make informed decisions.
Women-led companies outperform men
It is becoming increasingly evident that investing in companies with female CEOs yields much higher returns than investing in those led by male executives.
A recent Boston Consulting Group study of 350 companies revealed that for every dollar of investing capital spent, women-run businesses generate 78 cents in revenue compared to only 31 cents earned by male-run firms. This indicates there is significantly more rewarding potential investing in female led enterprises, and could be a great addition to investing portfolios such as ETFs or stocks. Allocating resources towards investing in businesses with strong female leadership should be a priority, as the data speaks for itself: empowering female CEOs pays dividends!
Why women-led companies outperform men
A study done by Illuminate Ventures also revealed that female entrepreneurs motivation appears to be different than those of male entrepreneurs. Only 2% of women were motivated primarily by financial gain compared to 15% of the male participants. This research has shifted the understanding of motivations among investors, leading to powerful investing tools such as ETFs being developed specifically for female CEOs and other investing opportunities tailored for female entrepreneurs. Despite once being overlooked as prime investing opportunities, women are now taking charge in investing and making great strides in business ownership.
Other considerations when investing in female CEOs
Of course, investing into female-led enterprises isn’t black and white and may encounter other dilemmas when it comes to your investment portfolio.
Take this as an example. Let's say you’ve found a great company that has a female leadership team and is actively seeking to be as inclusive as possible. However, the firm has been criticised for polluting their local area with waste. Where does this sit with your moral compass? Is it right to boost female leadership if they’re damaging the environment? That’s why you need to look at the company as a whole - and the only way to do that is by doing thorough research.
It’s a topic that could be debated until the cows come home and will no doubt crop up as you start investing into causes you believe in. Finding a balance is key and keeping a diversified outlook in your portfolio will make you a savvy investor.
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