‘SHE’: Gender Diversity & Smart Beta Meet

April 18, 2017

In March, State Street Global Advisors’ SPDR SSGA Gender Diversity Index ETF (SHE) took home five awards from the annual ETF.com Awards, more than any fund before. The fund was one of the most important launches of 2016, bursting out of the gate with a heavy seeding from teacher pension fund CalSTRS, which helped develop the fund. Lynn Blake is an executive vice president at State Street and the CIO of global equity beta solutions, where she is also the fund’s lead portfolio manager. Here, she discusses the investment argument underlying the fund and how it came into being. 

ETF.com: Would you talk about the investment argument for gender diversity that drives SHE?

Lynn Blake: It really is based on the volumes of research that have been done by so many organizations, like McKinsey and Catalyst and the Clayman Institute and Credit Suisse and MSCI. I can go on.

All of the evidence shows that greater gender diversity leads to more thought and perspectives, which leads to better decision-making. And those better decisions ultimately translate to stronger corporate performance, profitability and—ultimately—price.

That's really the investment thesis. That's the business case around gender diversity for portfolio companies, as well as organizations more broadly.

Some of that research has been focused at the corporate board level, but also much of it—including the research done by the Clayman Institute—extended to senior leadership levels. And it was really diversity at senior leadership levels that had the greatest correlation to stronger performance.      

ETF.com: Is part of the appeal of the fund based on the way it melds a socially responsible mission with a smart beta approach?

Blake: Absolutely. The goal of the SHE ETF and the Gender Diversity Index is twofold. It certainly is to address the social issue of the gender gap in corporate America, to ultimately try to change the composition of corporate America by identifying companies that really have been able to attract and retain a diverse workforce.

But then, as important an objective as the social issue is the investment thesis behind that social issue. And that's where we really have looked at the research and done our own research that has corroborated all of those other firms that have looked at gender diversity and the impact on performance.

 

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