During the last few years there’s been a spate of empirical research showing that companies with more diverse leadership teams outperform their less diverse peers.2 It’s been great to see, as these studies have reaffirmed our investment thesis that companies with more women decision makers perform better in the marketplace. But now we have even better evidence to support that thesis — the results of our own Fund.
We built our Pax Ellevate Global Women’s Leadership Fund by analyzing the approximately 1,600 companies in the MSCI World Index (the World Index), rating them on the degree of diversity in their senior leadership teams, and investing in those with the most. (For more on the factors we use to rate the companies, see “The Five Factors,” within, or visit our index design page.) As a result, the Fund holds about 400 of the highest-rated companies in the world for advancing women’s leadership.
It has been a winning strategy. Since its inception in June 2014, the companies in this Fund have outperformed the MSCI World Index.
But that’s not all: During the same period, the companies in the Pax Ellevate Global Women’s Leadership Fund have significantly outperformed the bottom 75 percent of companies in the World Index — those with less gender diversity. Over 54 months since the Fund’s inception, 90 percent of the Fund’s relative outperformance can be attributed to owning those 400 companies in the World Index rated highest by the Impax Gender Analytics team, i.e., the gender leaders, while 10 percent of the Fund’s relative outperformance can be attributed to not owning those companies in the bottom three-quarters of the World Index — the gender laggards.
What does this tell us? It’s smart to invest in companies that bring more women onto their boards and executive management teams. The companies in our Fund understand that gender diversity helps them solve critical business challenges, and we believe they’re outpacing their counterparts at least in part because of their gender advantage.
What else does it tell us? Not investing in companies that lag behind their peers on gender diversity and advancement also has helped this Fund outperform global developed markets. In other words, where we didn’t invest matters as much as where we did.
The status of women in an organization tends to have a positive correlation to its performance in the marketplace, and in the marketplace there are gender laggards and gender leaders. We’ll follow the leaders.
Here are the factors the Impax Gender Analytics team examines when measuring companies on gender diversity and leadership. (Factors one and two have the heaviest weighting on a company’s rating.) 1. Representation of women on boards of directors 2. Representation of women in executive management 3. Presence of women CEOs 4. Presence of women CFOs 5. Signatory to the Women’s Empowerment Principles*
See our index design page for more information.
*a joint initiative of the UN Global Compact and UN Women
1The minimum investment needed for investment in the Pax Ellevate Global Women’s Leadership Fund is $250,000.
The top 10 holdings of the Pax Ellevate Global Women’s Leadership Fund as of 12/31/2018 are as follows: Microsoft Corp. 4.0%; Canadian Utilities, Ltd., Class A 2.1%; American Water Works Co., Inc. 2.1%; Texas Instruments, Inc. 2.0%; Wolters Kluwer NV 2.0%; Intuit, Inc. 2.0%; Swedbank AB, Class A 2.0%; Estee Lauder Cos, Inc. Class A 1.9%; Cisco Systems, Inc. 1.9%; Johnson & Johnson 1.9%. Holdings are subject to change and are not a recommendation to buy or sell any security.
The annualized returns for the Pax Ellevate Global Women’s Leadership Fund – Institutional class as of 12/31/2018 were, 1 year: -7.51%, 3 year: 7.15%, 5 year: 5.31%, 10 year: 8.86%, since reorganization 4.72%. “Since Reorganization” date is 6/4/2014; 5-year and 10-year performance data pre-date fund reorganization.
Performance data quoted represent past performance, which does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For most recent month-end performance information, visit www.paxworld.com.
RISKS: Equity investments are subject to market fluctuations, the fund’s share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The Fund does not take defensive positions in declining markets. The Fund’s performance would likely be adversely affected by a decline in the Index. Investments in emerging markets and non-U.S. securities are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation, intervention and political developments. There is no guarantee that the objective will be met and diversification does not eliminate risk.
You should consider a fund’s investment objectives, risks, and charges and expenses carefully before investing. For this and other information, call 800.767.1729 or visit www.paxworld.com for a fund prospectus and read it carefully before investing.
On 6/4/2014, the Pax World Global Women’s Equality Fund merged into the Pax Ellevate Global Women’s Leadership Fund (the Fund), pursuant to an Agreement and Plan of Reorganization dated March 4, 2014 (the “Reorganization”). Because the Fund had no investment operations prior to the closing of the Reorganization, Pax World Global Women’s Equality Fund (the “Predecessor Fund”) is treated as the survivor of the Reorganization for accounting and performance reporting purposes. Accordingly, all performance and other information shown for the Fund for periods prior to 6/4/2014 is that of the Predecessor Fund.
The Pax Global Women’s Leadership Index is a customized index of the highest-rated companies in the world in advancing women’s leadership, as rated by Impax Gender Analytics, and that meet key environmental, social and governance (ESG) standards, as rated by MSCI ESG Research. Companies are rated by Impax Gender Analytics based on multiple criteria of gender leadership, including: representation by women on the board of directors and in executive management, woman CFOs, woman CEOs and whether they are signatories to the Women’s Empowerment Principles. Inception date of The Index is 02/28/14. A custom index calculated by MSCI. One cannot invest directly in an index.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index consists of the following 23 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States. Performance for the MSCI World Index is shown â€œnetâ€, which includes dividend reinvestments after deduction of foreign withholding tax. One cannot invest directly in an index.
Copyright© 2019 Impax Asset Management LLC, formerly Pax World Management LLC. All rights reserved. Pax World Funds are distributed by ALPS Distributors, Inc. Member: FINRA. ALPS Distributors is not affiliated with Impax Asset Management LLC.