Legal & General Investment Management (LGIM) has launched what it claims is the first gender diversity fund focused on UK-listed companies.
The L&G Future World Gender in Leadership UK Index Fund aims to invest more in companies that have achieved higher levels of gender diversity.
It is also expected to raise gender diversity standards in companies across the UK equity market, by allocating more to companies that have achieved higher levels of gender diversity. The fund aims to empower investors to make a difference to the companies in which they invest and wider society.
The fund will be available to individual investors through LGIM’s personal investing platform and also to financial advisers.
LGIM said it will score and rank companies according to four gender diversity measures: women on the board of directors, women executives, women in management, and women in the workforce.
Companies are expected to reach a minimum of 30 per cent representation of women in these four measures.
The company added these scores are based on LGIM’s own proprietary research and are fully aligned with its voting and engagement policy.
And now that companies have begun to report their gender pay gap data, LGIM will consider incorporating this as a potential fifth measure.
The fund tracks an LGIM-designed index of around 350 of the UK’s largest companies.
It aims to deliver returns by tracking the UK equity stock market via low-cost and transparent index exposure, managed against the Solactive L&G Gender in Leadership UK Index.
The index is ‘tilted’, according to LGIM’s proprietary gender diversity score.
Provider view:
Helena Morrissey, head of personal investing at LGIM, said: “Gender inequality is one of the key issues of our time, and one that generates so much frustration. Rather than feeling trapped or despondent, let’s do something about it. I’m excited about the launch of the GIRL Fund, which empowers us all to use our money to help companies to progress. When we invest in the success of women, we are investing in the success of business. Collectively, we can help achieve gender equality and improve gender diversity in the UK”
Clare Payn, head of corporate governance North America at LGIM, added: “LGIM has been active in the diversity debate since 2011, and has been voting against all-male boards since 2015. We see this as a business issue. Tapping into the most diverse talent pool is vital in a competitive and changing market for companies to remain relevant. Boards made up of just men, from the same socio-economic backgrounds, cannot be the best forum for challenging debates. The fund is a natural progression given the engagement we’ve been undertaking.”
Charges:
No initial charge, but an ongoing charges figure of 0.5 per cent applies.
Adviser view:
Scott Gallacher, director at Rowley Turton, said: “I’d hope that the L&G Girl fund was genuinely created with the laudable aim of improving gender diversity that we’d all support.
“However, I suspect it’s much more likely a product of the marketing team designed to appeal without actually delivering on performance or change.
"Even within L&G's own press release there is no evidence that gender diversity has an impact positive, or negative, on investment returns. It’s quite telling, the quotes simply refer to companies remaining ‘relevant’ or helping companies ‘progress’.
“Unfortunately I also don’t think that, on its own, this fund will have any impact on the gender diversity of UK businesses, as it would be too small to influence decisions.
"It’s also worth mentioning that this fund in isolation is unlikely to be suitable for most clients due to its UK-equity focus, that is, it’d be too high risk for many.”
Verdict:
LGIM’s plan for this fund appear to have good motives but the jury is out on whether advisers will be drawn to the fund amid current market challenges.
