If you’ve been thinking about putting your money into a women-owned business, then you may want to learn more about gender diversity funds and how they work.
Gender diversity funds are an excellent way to better the lives of women both in business and in general while also giving your own income and savings an added boost.
Keep reading to find out how you can start investing your money in a socially responsible way.
What is a Gender Diversity Fund?
Gender diversity investing is a type of impact investing that aims to promote gender equality by providing investors the opportunity to make their investments through a gender lens.
Investing through a gender lens means that you prioritize investing in women-owned businesses or companies that advance women’s leadership.
A gender diversity fund is an easy and effective way to get started in gender diversity investing, especially if you’re unsure of which companies really promote gender diversity and equality.
Gender diversity funds do the work and research for you to make sure your investments are put toward businesses with female executives and an overall gender diverse staff.
The goal of gender diversity investing is to promote equal treatment of women in the workplace.
Just like any other type of impact investment strategy, you should expect to make a measurable social impact in the way of supporting women while also gaining significant financial returns.
Despite rumors stating that gender diverse investing will result in less favorable financial returns than other investment strategies, investing in gender diverse companies has been proven to provide stronger returns.
In fact, a study done by McKinsey & Company showed that companies ranking in the top quartile for gender diversity are 15% more likely to produce high financial returns than other businesses in lower quartiles.
How Does a Gender Diversity Fund Help Women?
As we mentioned, gender diversity funds aim to support women by focusing investments only on companies that also actively support women, usually by having women in leadership roles, a large number of women on staff, or by producing goods and services that are important in the lives of women.
By investing in these companies over those with less women on staff or no impact on bettering women’s lives, you can make sure your money goes toward fighting important gender diversity battles like equal pay and encouraging female participation in the economy.
Gender diverse investing also helps to fund women-owned businesses, especially those that are still trying to find their foothold in the industry.
Start-up capital is essential when creating a new business.
It allows entrepreneurs to pay for important expenses like paying employees, renting and furnishing office space, obtaining licenses and permits, stocking inventory, paying bills, conducting research, manufacturing products, hiring accountants or lawyers, and marketing the products.
On average, female entrepreneurs receive only 2% of the total amount of start-up capital invested in new businesses each year.
One of the ways to counteract this immense imbalance is to invest in gender diversity funds, which aim to provide more capital to start-ups created by women.
Top Gender Diversity and Gender Equality Funds
If you don’t know where to start when it comes to investing your money to make a social impact, or you simply don’t have the time to do all the necessary research into a company’s policies and board of directors, consider investing in a gender diversity or gender equality fund.
They will do the research for you so you can rest assured your money is going to businesses that align with your morals and that provide you with the financial returns you both need and expect from your investments.
Gender Equality Funds compares hundreds of different funds and provides them with a gender equality score based on criteria known as the Equileap Gender Equality Scorecard (EGES).
Below we’ve listed some of the highest ranked gender diversity funds, in terms of both net assets and Equileap Gender Equality Score, as ranked by Gender Equality Funds:
- Pax Ellevate Global Women’s Leadership Fund: $907.84 million, 58/100 EGES.
- Saturna Sustainable Equity Fund: $23.9 million, 55/100 EGES.
- Parnassus Endeavor Fund: $5.11 billion, 55/100 EGES.
- Green Century MSCI International Index Fund: $153.91 million, 52/100 EGES.
- Neuberger Berman Sustainable Equity Fund: $1.95 billion, 51/100 EGES.
There are thousands of other funds available as well, so you will be able to find the one that flawlessly aligns with your investment needs and your moral compass.
Gender diversity is a hot topic, and one that is growing more and more each year.
If you have been thinking about supporting a women-owned business, then now may be the perfect time to start making a difference in both the business world and your own investment portfolio.