New ETF Bets on Female CEOs

January 09, 2023

Hypatia Capital Management, an asset management firm focused on female leadership and investors, is placing a big bet on the success of companies led by women.  

The actively managed Hypatia Women CEO ETF (WCEO), launched Monday, aims to invest at least 80% of its assets in U.S. companies that are led by a female CEO and up to 20% in companies whose executive chairperson is a female, according to the prospectus.  

The ETF will also follow the Hypatia Women CEO Index, an index that tracks companies with female CEOs and market capitalizations of at least $500 million. 

The Hypatia team—named for the first female mathematician in ancient Alexandria, Egypt—believes women who attain these senior leadership positions have had to face greater headwinds than their male counterparts. That also means women tend to outperform and run more successful businesses. 

“WCEO gives investors the ability to balance their portfolio in equities from a gender perspective and from a leadership perspective,” Hypatia’s Managing Partner Patricia Lizarraga told ETF.com. “We very much believe that investors want balance and women want to invest in women.” 

WCEO is listed on the NYSE Arca and comes with an expense ratio of 0.85%. The fund currently has $255,400 in assets. 

The ‘Female Factor’ 

The fund debuts as the gap between female and male leaders across the corporate world is at its widest, with women stepping away from key positions at a record rate, according to a report from McKinsey & Company. For every 100 men who are promoted from entry-level to management, only 87 women made a similar jump, the data found. 

“It's our investment thesis that the women who make it to the top of the pyramid have had to overcome additional obstacles and, thus, have something extra over their male counterparts that did not,” Lizarraga said. “So, if you can isolate that extra—which is what we call the female factor—one may be able to capture the alpha that we believe will ensue.” 

WCEO’s top holdings are Occidental Petroleum Corp. and International Seaways Inc., run by female CEOs Vicki Hollub and Lois Zabrocky, respectively. 

Hypatia launched an ETF so the investment philosophy would be available to the average retail investor, whereas prior investment opportunities were mostly focused in seed, angel and venture capital, according to Lizarraga. 

WCEO isn’t the only fund investing in companies that prioritize female leadership. The fund competes in the same arena as the SPDR SSGA Gender Diversity Index ETF (SHE), which has over $204 million in assets, and the Impact Shares YWCA Women’s Empowerment ETF (WOMN), which has almost $33 million in assets, according to data from ETF.com.  

“Many people say the road to equality is long, and it's going to take some time, but we're saying, actually, no,” Lizarraga said. “You can make your portfolio gender equal from a leadership perspective today.” 

 

Contact Zoya Mirza at [email protected] 

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