Around The World With Women In ETFs

It’s been a busy 24 hours around the globe with Women in ETFs. And I was awake for much of it!

The first-of-its-kind WE Global 2021 Conference this week was a fitting culmination of the organization’s efforts for the cause of inclusivity.

Started seven years ago as a platform not just for women, but for everyone who’s committed to diversity in our industry, WE now boasts some 6,700 members worldwide, and it attracted more than 2,200 attendees to its first conference.

Impressive Inspiration

The virtual event, which kicked off Tuesday morning, started with panels hosted in the U.S. (Eastern Time), moved into Asia-Pacific and Europe/Middle East/Africa (EMEA) regions overnight, and returned to U.S. soil today. It was a 24-hour global tour talking about ETFs, COVID, markets, the realities of remote work and the battle for diversity.

It was an impressive event, to say the least—inspirational, to put it honestly.  

The conference was held under Chatham House Rule, unfortunately, which means direct attribution of content is a no-no. To hear the insights from folks like U.S. Military Academy’s Dr. Lissa Young, BMO Asset Management CEO Kristi Mitchem, GTS’ Reggie Browne, Franklin Templeton CEO Jenny Johnson, ARK Invest's Cathie Wood, and CSOP’s Melody He—among many, many others—you’d have to have been there.

But perhaps, fortunately, because of the Chatham Rule, conversations ran deep and quite candid. The takeaways were many.

(I must quickly confess that a 24-hour event requires a 24-hour attention span. I didn’t last. Around that midnight mark, I learned the limitations of caffeine. But here are some of the insights I took from the event.)

ETF Innovation

The ETF industry has been fertile ground for innovation. But innovation has to solve a problem or improve an outcome to be meaningful. Innovation just for the sake of being first or being new falls on deaf ears.

While innovators come in all shapes and sizes, smaller asset managers and issuers have proven to be particularly good and nimble in their pursuit of new ground. You could say the small size factor in this area is working well, and it has to do with these firms’ ability to move quickly, sometimes as quickly as three months from original idea to launch.

Thematic ETF Staying Power

The global pandemic has had an interesting impact on how ETF investors invest—themes have suddenly become universal. Everyone, no matter the region, understood the case for “work from home” stocks, e-everything, telemedicine, cloud computing, home-based entertainment, etc. ETFs that captured these themes resonated, and found a following.

A focus on disruption has worked well in this space. Telling a compelling story has been key to asset-gathering success. Good performance has sealed the deal. None did it better—or more visibly—than ARK Invest in 2020, with its lineup of disruptive-innovation cross-sector funds.

ARK is an active shop. But theme investing through index-based portfolios has been equally successful. Global X has seen its asset base grow fivefold in three years. Direxion and its Work From Home ETF (WFH) captured everyone’s imagination last year. The list of success stories in theme investing goes on.

Today thematic ETFs represent about 2% of the overall market. At the conference, the outlook for this segment was bullish.

Environmental/Social/Governance Growing Up

ESG has moved well past the focus on the environment—the “E”—and well into the “S” and the “G” aspects of the conversation, all within the framework of capturing sustainability across businesses and industries.

ESG is increasingly seen by companies as a path to better shareholder value. It’s also a factor or a theme that has shown to be a risk management tool in portfolios. Hearing industry participants talk, it’s clear that even as concerns brew that ESG ETFs may face bouts of underperformance given their sector tilts (often toward technology), sustainability is a one-way trip.

The improving robustness of data sets, as well as the efforts for more standardized metrics and a more consistent landscape should continue to support growth in this segment. As one panelist put it, “ESG investing is to become the new core.”

Diversity: The ‘Evergreen Priority’

Diversity is a story about inclusion. It’s about access. It’s dependent on education. It requires transparent dialog. And it calls for persistence and for a commitment to finding, fostering and empowering new voices and talent.

Women in ETFs is on that mission. This tour around the world in 24 hours didn’t shy away from raising the issue of diversity, sharing success stories, personal accounts, and challenges ahead. It was heartwarming to see diversity from different perspectives and regional voices.

The conversation centered on the importance of having shared values, of top-down positive corporate culture, of finding personal and professional purpose, of being resilient in the face of adversity, and of having a vision for the future.

My (proud) sense, as a member, after this event, is that the ETF industry, globally, is carrying the diversity torch.  

“Inclusivity is fostered,” someone said. Talent, recruitment, community engagement, responsibility to advocate for and to champion diversity are all parts of this effort.

The digital environment we are currently living and working in could be a catalyst for better diversity across the industry, some said, as remote work opens the door for new talent to land in the right jobs. No more geographical concerns. That should create opportunities for disruptors, innovators, outside-the-box thinkers and diverse talent to find their way into the industry, supported and encouraged by those who’ve gone before them.

As someone put it, diversity needs to be an industry goal. “If we don’t set goals, we can’t achieve them.”

(Women in ETFs said all panels were recorded and should be available for viewing at www.womeninetfs.com early next month.)

Contact Cinthia Murphy at [email protected]