Over the last few years, investors have witnessed the rise of more socially-conscious funds, or funds that look to appeal to a certain viewpoint. In this vein, Barclays has released an ETN that seeks to track the returns available from an investment in the Women in Leadership Index, a new way to target firms that have elevated women to leadership roles.
This benchmark gives investors exposure to companies that either have female CEOs or have women comprising at least 25% of their board of directors. The eligible universe for inclusion here consists of all U.S.-based securities, so long as they satisfy certain market cap, liquidity, and concentration limit requirements (see all the broad market ETFs here).
Why the Focus?
While some investors might not appreciate this strategy of only targeting women-run businesses, some research has shown that these companies have the ability to outperform broad markets. In fact, according to a recent Fortune article, Fortune 1000 companies with female CEOs have easily outperformed the S&P 500 index, putting up a gain of 103.4% compared to a return for the market of 69.5% in the same time period.
Given this outperformance and rising interest in more socially conscious investing, or at least investors putting a greater weight on some corporate governance issues, it shouldn’t be too surprising to note this new ETN’s launch. Below, we have highlighted some details about this new Women in Leadership ETN, trading under the symbol of WIL, for those investors who want to consider this approach.
Currently, the index has just over 85 stocks, with a definite focus on large cap companies. The top ten is comprised entirely of large caps, though they do manage to stretch across a variety of industries.
Some of the top companies in this index include Pepsi (PEP - Analyst Report), Procter & Gamble, Wells Fargo (WFC), and Pfizer, all of which account for 5% of the total assets. It is also worth noting that the portfolio is pretty well spread out across sectors, as no single industry makes up more than 20% with both technology and staples accounting for roughly 18% of assets (see all the Zacks ETF Rank #1 Funds here).
Investors should also note that the ETN charges investors 45 basis points a year in fees, a pretty steep level when compared with other broad market, U.S.-focused funds, but on par with other more nuanced products. It is also important to remember that this product is an ETN, and as such, has no tracking error though it does have credit risk from the issuing bank, Barclays Bank.
Competition & Bottom Line
This product is unlike anything on the market right now, though there are a few socially conscious or workplace policy focused funds out there. Two of the more popular funds in this regard are (DSI - ETF report) and (KLD - ETF report) from iShares, both of which have over a quarter billion in assets under management. However, in my opinion, the most similar (though granted it is a stretch) is the Workplace Equality ETF .
This fund targets companies that score a perfect 100% on the Human Rights Campaign Corporate Equality Index, and thus is focused on companies that support the LGBT community in the workplace. While this is obviously very different than the female CEO issue, it does speak to the trend of investing with a social ideal or corporate governance policy in mind, so it is similar in that regard (read ALPS Debuts Workplace Equality ETF).
Either way, it will be interesting to see if this new ETN can accumulate assets in a crowded multi-cap ETF market. The fund does have some differentiating factors, and research does suggest that this technique can outperform broad markets.
However, only time will tell if this outperformance streak can continue, but if it does, look for this ETN to both accumulate some assets, and keep the trend of putting corporate policies at the forefront of investing as well.
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