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.
Hypatia Capital has been focused on investing in women in leadership since 2007 and is one of the standouts. Patricia Lizarraga, who is the managing partner of Hypatia Capital, is based in New York. Lizarraga said the firm's name is based on a trailblazing female.
She says that she researched who was the first woman mathematician and the first woman astronomer. They were the same person: Hypatia of Alexandria. WCEO is the only investment strategy that invests in women CEOs, and specifically isolating the Female Factor: 118 holdings include all publicly traded American companies with a female CEO, small to mega-cap. Lizarraga tells FOX Business that the industry is neutral and equally weighted.
The Hypatia Women Hedge Fund Index is powered by Wilshire and is currently published by Hypatia.
ThisETF is a vehicle to invest in female-led companies for investors who are interested in investing in female-led companies.
Lizarraga says that the WCEOETF allows investors who believe in equality to be able 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.
Today, Lizarraga adds that you can't change the world, but you can reach gender equality in your domestic equity allocation.
Roxanna Islam, associate director of research at VettiFi, acknowledges that WCEO is the first ETF that focuses on companies led by a female CEO.
These companies are expected to generate excess returns under the thesis that 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, whereas WCEO seems more focused on the alpha that female CEOs can provide, Islam says.
She continues that WCEO holds some relatively small stocks and has a 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.