Helena Morrissey issued a rallying cry to British companies to improve diversity in their workforce as she unveiled the UK’s first gender-orientated fund on Thursday.
Dame Helena, who is head of personal investing at Legal & General Investment Management, said the L&G Future World Gender in Leadership UK index fund would help raise gender diversity standards in companies across the UK equity market.
Backed with £50m of funding from Legal & General, the so-called Girl fund will allocate more capital to companies that score well for gender diversity at board, executive, management and workforce level compared with their weight in an index of about 350 large and mid-sized listed British businesses. Companies with neutral or bad gender scores will receive less capital.
Melrose, the company behind the £8bn hostile takeover of UK engineer GKN, was awarded the worst possible score of zero and has been excluded from the fund.
“The Girl fund is a very important step towards achieving gender equality in the future,” she said. “We hope it will send a powerful message to companies to tackle these issues.”
The Renewables Infrastructure Group, the energy company, received a perfect score for gender diversity. Merlin Entertainments, the attraction operator, events businesses Ascential and UBM, and retailers Next, Marks and Spencer, N Brown and Asos also received high scores.
Stobart, the infrastructure and support services company, financial services business Just and Hochschild Mining, the metals producer, received bad scores for gender diversity, meaning they will receive less investment from LGIM compared with a traditional FTSE 350 tracker fund.
G4S was also excluded after LGIM’s research provider, Sustainalytics, considered the security company to be in violation of the UN global compact, an initiative focused on human rights, as well as labour, environmental and anti-corruption standards.
State Street Global Advisors, the third-largest asset manager in the world, launched a gender diversity exchange traded fund, known as She, in 2016, which invests in US stocks. But the LGIM offering is the first focusing on the UK, where companies are coming under greater pressure from the government, investors and the public to tackle workforce diversity.
In April, UK companies with more than 250 employees were forced to publish their gender pay gaps, which showed that women in many industries earned significantly less than men.
Various studies have found that companies with more diverse workforces outperform. Research in 2015 by the Peterson Institute, a US think-tank, and EY, the professional services firm, which looked at more than 21,000 public companies in 91 countries, found that bringing more women into higher management boosted profitability.
The She ETF returned 19.5 per cent in 2017, compared to 21.8 per cent for the S&P 500 index of large companies. This year it has returned 0.48 per cent so far, ahead of the S&P 500 — which has lost 0.38 per cent.
Dame Helena, who rose to fame as a campaigner for more women in top jobs while chief executive of Newton, the asset manager, said she believed gender diversity had an impact on shareholder value over the long term.
Sacha Sadan, director of corporate governance at LGIM, added the fund manager would not have put as much effort into gender diversity over the years if it did not believe it had a material impact on company performance. LGIM, one of Europe’s biggest asset managers, has been among the most vocal advocates of increasing the number of women in the workforce.
Dame Helena said she hoped the fund would appeal to a wide range of investors but added that millennials and women showed particularly strong interest in investments that tackled societal problems. The fund will have an ongoing charge of 50 basis points.
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