Tuesday, March 10, 2020

Female Investors Make More Money by Caring about People and the Planet

Women control $14 trillion of personal wealth in the U.S. and they are an important part of the rapidly growing impact investing market. According to the Global Impact Investing Network (GINN) the size of the impact investing market doubled between 2017 and 2018 to $228 billion in assets under management.

The investing community is still very much a male dominated world.  Between 80 and 90 percent of hedge fund managers, financial advisors, and traders are male. However, this is changing as illustrated by the recently launched Impactive Capital LP,  whose co-founders are two women by the name of Christian Asmar and Lauren Taylor Wolfe. Their ESG focused fund launched with $250 million from the California State Teachers’ Retirement System, or CalSTRS.

According to Lynne Ford, Executive Vice President of Calvert Investments women are leading the way on sustainability.  A survey conducted by Calvert found that 95 percent of affluent women ranked "helping others" and 90 percent ranked "environmental responsibility" as important.  These women are more than twice as likely to invest responsibly (70 percent vs. 31 percent).

These women are not only more concerned about benefiting people and planet they are also better at generating a profit. A 2017 survey by Fidelity Investments found that the research suggests that women generate better returns than their male counterparts.

Goldman Sachs is a bank that acknowledges the value of women. Goldman's CEO David Solomon said that over the last four years companies going public with women on their boards have performed "significantly better" than those without.

Goldman has four women on their board of directors and they are intent on allocating capital to low carbon businesses, they are also helping to increase the presence of women on company boards. Goldman recently announced that starting on July 1, 2020 at least one women will be required on a company board if they want to go public. In 2021 that number will double to 2.

The takeaway is that women are better money mangers and they are expected to control even more capital going forward. According to some projections, up to 70 percent of the $30 trillion intergenerational wealth transfer over the next 25 years will go to women. Women's interest in impact investing will only increase as younger women get older. There are good reasons to believe that women will soon hold a majority share of investment dollars and this will drive the growth of impact investing.

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