This ETF is the first in the US to invest in women CEOs

Empowering women to thrive in leadership positions is at the forefront of American businesses. This trend continues to expand to all facets of the U.S. economy, including investing and asset management.

Since 2007 Hypatia Capital has been focused on investing in women in leadership. Patricia Lizarraga, the managing partner of Hypatia Capital, is based in New York. The naming of the firm is based on a trailblazing female, according to Lizarraga.

She says that she researched who was the first woman mathematician and the first woman astronomer. They were the same person: Hypatia of Alexandria. As far as we know, WCEO is the only ETF that invests in women CEOs as an investment strategy, and specifically isolating the Female Factor: 118 holdings include all publicly traded American companies with a female CEO, small to mega-cap. Lizarraga told FOX Business that the industry isn't heavily weighted.

The Hypatia Women Hedge Fund Index is powered by Wilshire and is currently published by Hypatia.

This ETF is a vehicle for investors who are interested in investing in female-led companies.

Lizarraga says that the WCEOETF allows investors who believe in equality the ability to balance the domestic equities allocation of their portfolio for gender equality in CEO leadership. According to the World Economic Forum 2022 report, it will take 132 years to reach gender equality in the world.

Lizarraga adds that you can't change the world, but you can reach gender equality in your domestic equity allocation today.

Roxanna Islam, associate director of research with VettiFi, acknowledges that WCEO is the first ETF that focuses on companies led by a female CEO.

The thesis is that these companies are expected to generate excess returns because female CEOs may have extraordinary leadership capabilities to compensate for barriers to entry for females in high-ranking corporate positions, Islam tells FOX Business. Up to 20% of its assets may be invested in companies with female board members, but the primary focus is on female CEOs. There are a couple of other ETFs that focus more on gender diversity, according to Islam. She notes that the SPDR MSCI Gender Diversity ETF SHE focuses on companies that are ranked by gender diversity ratios of female executives and board members. She says that the Impact Shares YWCA Women s Empowerment ETF WOMN focuses on companies that qualify for certain gender diversity screens, including female CEOs board members, but also equal compensation, work-life balance and other gender-diverse policies.

It is interesting because these seem to be more ESG focused on gender diversity compared to WCEO, while WCEO seems more focused on the alpha that female CEOs can provide, Islam says.

She continues to note that WCEO currently holds some relatively small stocks, but has a much lower median market cap of $4.5 billion compared to SHE and WOMN, which have a higher weighting to mega-cap tech stocks and a median market cap within the $100 billion to $150 billion range. I also think it is worth noting that WCEO currently does not share any of its top 10 holdings with either SHE or WOMN.