With surveys reporting women departing top corporate roles in larger numbers, one firm is seeking to change the trajectory, starting with an exchange-traded fund that invests in women-led companies.
New York-based Hypatia Capital is planning an actively managed ETF called the Hypatia Women CEO ETF (WCEO) early next year. It will track companies that are led by female CEOs or whose boards have females as executive chairpersons, according to a filing submitted to the Securities and Exchange Commission in early October.
While seeking to show that investing in female-led companies is a good bet, the fund comes as the gap between female and male leaders in corporate positions is at its widest on record, according to a McKinsey & Co. study published in October.
At the same time, surveys—such as 2016’s report from the Peterson Institute for International Economics—have concluded that companies with women in leadership positions are more profitable than those without.
In its prospectus, the firm says “...excess returns can be generated by investing in companies led by women because given the documented structural barriers women face in advancement in corporate America, a woman that reaches the Chief Executive Officer (or equivalent) position must possess extraordinary leadership characteristics to compensate for those additional barriers to entry.”
Asset manager Hypatia—named for the first female mathematician in ancient Alexandria, Egypt—is betting its dollars on companies where women steer the ship, relying on research that proves female leadership delivers better business results. The firm, whose managing partner is Patricia Lizarraga, runs a pair of indexes highlighting women in publicly traded companies and female-run hedge funds.
Hypatia’s website says the firm believes “there should be more women at the helm of America’s largest corporations and in the investment management industry.”
WCEO expects to primarily track the Hypatia Women CEO Index, which tracks the performance of U.S. companies that have market capitalizations of at least $500 million and are led by female CEOs.
Hypatia’s fund is planned as studies show an erosion in women’s corporate power. For every woman at the director level who gets promoted, two women directors choose to leave their company, according to a joint study from McKinsey & Co. and LeanIn.org. For women of color, the situation is worse: For every 100 men promoted from entry level to manager, only 82 women of color are promoted, the study found.
The COVID-19 pandemic exacerbated the situation, the survey said. Women’s childcare and domestic duties increased, taking a toll on their career trajectory.
Hypatia’s proposed ETF will join a space that is dominated by other women leadership-focused funds, such as the SPDR SSGA Gender Diversity Index ETF (SHE), the iPath Women in Leadership ETN (WIL) and the Impact Shares YWCA Women’s Empowerment ETF (WOMN).
WCEO will charge an expense ratio of 0.75%.
Contact Zoya Mirza at [email protected]