While discussion of ESG often focuses heavily on the environment, there are notable investor opportunities to be found in the social and governance tranches of the investment lens.
The newly renamed SPDR MSCI USA Gender Diversity ETF (SHE ) is one such opportunity, with the ETF having changed indexes on Wednesday eyeing continued performance growth from its gender diversity investment approach.
The ETF saw $1.8 million in flows over four weeks according to VettaFi, outperforming its ETF Database category average by 1.29% over the last month and 2.93% over the last three months. SHE charges a 20 basis point fee compared to 36 basis points for its category average.
“SHE has held up better in the last three months than the broader S&P 500 Index proving that a focus on gender diversity can add value to end clients’ portfolios for advisors,” said VettaFi Head of Research Todd Rosenbluth. “However, the ETF has been under the radar for many advisors."
SHE will no longer track the SSGA Gender Diversity Index, which ranked the gender diversity at investible firms based on three ratios counting women executives.
Instead, the ETF will look to replicate the performance of the MSCI USA Gender Diversity Select Index, which assesses firms on women’s representation not only on executive boards and management teams but also as a percentage of the firm’s total employees.
SHE’s new index also screens for firms facing ESG-related controversies, strengthening the strategy’s ESG approach overall.
The MSCI Index is derived from the MSCI USA Index, which looks to measure the large and mid-cap markets, and screens each security from its parent index via a 0-10 ESG Controversy Score as well as a binary Labor Rights – Discrimination and Workforce Diversity Controversy Score of either 0 or 1.
SHE then applies a Women Representation Score and a Diversity Management Score, with the former representing a full 75% of the weight of the MSCI Gender Diversity Score assessed by MSCI. Each security’s weight in the index is capped at 4.5%, with the index rebalanced quarterly.
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