We’re Defaulting to Investing in Men - Why?
Impact investing* is quickly becoming mainstream. Women, in particular, report that it is important to them that their money supports their values. In 2017, some 84% of women said they would like to learn more about impact investing.
But gender lens investing** — that is, investing for returns, but also to advance women? Well … not so much. In fact, I often hear that the concept of “gender lens investing” feels sort of weird. (And let’s face it: That name – gender lens investing – isn’t doing it any favors.)
So, let me ask you:
Should you put most of your money into a single stock?
The answer is “No.” We learn in Investing 101 that “diversification” is a key tenet of prudent investing: In other words, don’t put all of your eggs in one basket.
Should you put most of your money into a single asset class, like US “large cap” stocks?
For the same reason, the answer is “No.”
Should you put most of your money into a single region of the world?
Again, the answer is “No.”
Should you put most of your money into a single gender?
The answer usually is “Um, what?? Keep talking.”
Well, should you put most of your money into the equity of companies run mostly by men, into the debt of companies run mostly by men, into loans made mostly to men, into mutual funds that are run mostly by men, with those investments made through investing companies that are run mostly by men?
While there are no guarantees in investing, why shouldn’t the power of diversification extend to gender?
The answer to these questions is usually “Oops.”
What if I further told you that companies with greater gender diversity in their leadership teams tend to post better results than companies with less diversity; that women are more likely to repay their loans than men are; that women money managers are more likely to outperform men when it comes to earning higher returns?
Oh, and also that when the women you invest in build wealth, they are more likely to put it back into their communities and families, and that they donate a larger percentage of their money to non-profits.
“Gender lens investing” doesn’t seem as weird now, does it?
That’s what keeps us at Ellevest working as hard in these dog days of August as we do in January: Helping you invest to reach your goals, while those of you who choose our Ellevest Impact Portfolios also put your money to work advancing other women.
If we women were to collectively choose to invest into women just a fraction of the money that we now have defaulted into investing in men… well, that could be hundreds of billions of dollars of investments, supporting other women.
(And, yes, at Ellevest, our investment managers are women. And we are majority female owned.)
PS: You can switch to an Ellevest Impact Portfolio from your existing portfolio for any goal at any time. Click on “My Service” in the left-hand menu, then click “Impact Investing.” You’ll be able to choose which of your goals to update.
This article was originally published in Ellevest's newsletter, What The Elle. You can learn more here.
*Investing for a financial return, as well for as a positive social and / or environmental impact
** Investing with an eye toward financial returns while also taking into account the benefits to women. This can include investments that get money directly into the hands of women and/or investing in companies that advance women.
Have more questions? Follow up with the expert herself.
Sallie Krawcheck’s professional mission is to help women reach their financial and professional goals (or, put more bluntly, to get more money into the hands of women), thus enabling them to live better lives and unleashing a positive ripple effect for our families, our communities and our economy. To that end, Krawcheck is the Chair of the Ellevate Network, a 135K-strong global professional women’s network; she is also the CEO and co-founder of Ellevest, a... Continue Reading
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