Sweden is at the forefront when it comes to gender equality, but there is still a lot to be done and big differences to combat. Around the world, countries and companies are constantly working to improve gender equality. Several companies are working to improve the working environment in the workplace and reduce the pay gap between men and women in both lower and higher positions. Investing in companies and portfolios consisting of companies that work towards gender equality goals can be an opportunity to find future winners, as there are many indications that the companies that think about gender equality and the work environment foster a culture of high-performing employees who deliver results and growth.

Track Feminvest VON

Vontobel has launched a strategic certificate with an underlying index calculated by Bank Vontobel AG with Vontobel Asset Management as index sponsor to make investing in the future of gender equality easier from a buy and sell perspective with just one click, exchange-traded. The Strategic Certificate tracks the underlying Vontobel Gender Equality Strategy Index which seeks to invest globally in companies that empower women in the workplace, companies that are led by women or have a woman in a key C-level position (i.e. CEO, CFO or Chairman), or companies that stand out for having a low gender pay gap and have programmes that encourage professional development. The focus is on delivering positive returns relative to the MSCI ACWI Index USD which is the benchmark. Feminvest is acting as a marketing partner for the product in Sweden. Find the product here.


Companies’ gender equality efforts and how to measure them

The general perception may be that it is difficult to measure how companies work on gender equality. However, the truth is that equity research and market research measures a number of items from classic ESG issues such as climate impact but also how companies work internally on gender equality issues.

Data and news providers such as Bloomberg provide data on gender equality in listed companies. It can be measured in many ways from the proportion of women on the board, the proportion of women in management positions and the proportion of female employees. But gender equality is more than that, it is also based on the opportunities available to employees in companies, as well as opportunities for further development and training. When investing in companies, this is something that can be taken into account, but if you start from Bloomberg and the data available, you can see that since 2010, companies where women make up 25% of the management team have performed better than the S&P 500 index, with a particularly large difference in 2020 and 2021. If you also look at revenue and ROE (Return on Equity), other market analyses show the same trends where companies with a greater focus on gender equality generally present better in these parameters.

Global exposure

If you take a quick look at some components of the strategy, the following companies are included:

Microsoft Corporation is one of the largest companies in the world and operates as a software company. It offers applications, additional cloud storage and advanced security solutions. Microsoft serves customers all over the world. If you look at Bloomberg’s statistics on gender pay gap, Microsoft Corporation gets a rating of 10 where 10 is the highest possible. Furthermore, it also goes that the set of women on the board of directors 41.66%.

Novo Nordisk A/S is another company the strategy provides exposure to. The company develops, produces and markets pharmaceutical products. The company focuses on diabetes care and offers insulin delivery systems and other diabetes products and is one of the world’s leading suppliers in the field. Novo Nordisk also works in areas such as blood loss management, growth disorders and hormone replacement therapy. The company offers educational and training materials. Novo Nordisk has markets all over the world and was one of the most popular companies on the Danish stock exchange in 2023. According to Bloomberg, Novo Nordisk has also received a rating of 10 for the gender pay gap, with 10 being the highest. In addition, there are currently 46.5% women on the board and 49% of employees are women, of which 39% of management are women.

Fortescue Metals Group Ltd. explores for and produces iron ore. The company operates worldwide and is based in Australia. The company provides exposure to an interesting sector necessary for the energy transition and a country that can otherwise be difficult to invest in. According to Bloomberg’s gender pay gap, Fortescue Metals Group Ltd is also rated 10, where 10 is the highest. The company has a high proportion of women on the board, with the current board consisting of 62.5% women. Although the industry has historically been male-dominated, 23% of employees are women and 30% of management are women.

Index strategy

The index sponsor (Vontobel Asset Management AG) seeks to generate returns by selecting stocks of medium and large companies from developed markets that, in its view, empower women in the workplace and can help promote gender equality. The index sponsor focuses on companies in the following investment themes based on data from a recognised data provider: women in the workplace, female leadership, and pay and development opportunities. The women’s influence and workplace theme includes companies with a class-leading representation of women at different levels of the corporate hierarchy. The female leadership theme includes companies with one or more women in a leadership position. Finally, the pay & development opportunities theme includes companies that either have a low gender pay gap and have implemented human capital development policies.

The selection process is defined and implemented by the Index sponsor according to a proprietary quantitative model. The selection process is divided into 4 steps.

1. the Index Sponsor selects stocks of large and mid-cap and mid-cap companies from developed markets.

2. Second, the sustainability-based step excludes stocks of companies that violate the UN Global Compact, have any connection to controversial weapons, the oil and gas industry, thermal coal extraction, have revenues exceeding 10% from the production of tobacco or tobacco products or are involved in very serious controversies related to ESG issues. The index sponsor also retains shares in companies with a “best-in-class” rating for the social pillar. ESG ratings from recognised data providers that are higher than, or equal to BB, and with a non-negative operational alignment score for UN Sustainable Development Goals 5 and 8 are included.

3. Third, the theme-based step consists of the following investment themes based on data from a recognised data provider: women’s empowerment and workplace inclusion. Stocks with class-leading female representation at one or more of the different levels of corporate hierarchy. Female leadership includes companies with one or more women in one of the key management positions. Pay and development opportunities include shares in a) companies with a low gender pay gap, or b) companies with a best-in-class development performance.

4. Finally, the factor-based step involves constructing using the following factors (in order of importance): size by importance): size, quality, valuation, growth and momentum. The size factor is based on the company’s capitalisation. The quality factor uses a company’s profitability, such as return on equity. Valuation factors are used as valuation measures, such as return on profit. The growth factor uses measures of assets and sales growth. The momentum factor uses price momentum at different horizons. The index sponsor selects stocks from up to 30 companies with the best multiples.

The selected Shares are weighted proportionally. In addition, the shares of all companies considered must also fulfil predefined liquidity criteria with respect to the index and trading volume. The liquidity filter is designed to adjust for the purpose of adjusting the composition of the index and enables rebalancing of the index at least once every six months. The index is calculated in SEK and charges a fee of 1.25% p.a.

The tracker is open-ended with a termination right of the issuer. It is available on Nordnet and Avanza.

Text and image: Vontobel


 

Important Notice

This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the securities, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. It is recommended that potential investors read these documents before making any investment decision. The documents and the key information document are published on the website of the issuer, Vontobel Financial Products GmbH, on https://prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information includes or relates to figures of past performance. Past performance is not a reliable indicator of future performance.

© 2023 Bank Vontobel Europe AG and / or its affiliates. All rights reserved.

Significant Risks:

Credit risk of the issuer:
Investors in the products are exposed to the risk that the Issuer or the Guarantor may not be able to meet its obligations under the products. A total loss of the invested capital is possible. The products are not subject to any deposit protection.
Market Risk:
The value of the products can fall significantly below the purchase price due to changes in market factors, especially if the value of the underlying asset falls. The products are not capital-protected
Currency Risk:
If the product currency differs from the currency of the underlying asset, the value of a product will also depend on the exchange rate between the respective currencies. As a result, the value of a product can fluctuate significantly.

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