In the past 18 months, BNY Mellon has issued bold calls for gender inclusion, offering research to inspire financial markets to boost economic participation by women worldwide.
Now a new wealth management initiative called the PWER Portfolio is putting some of those ideas into action. PWER—an acronym for “promotion of women’s engagement and representation”—is built on a growing body of research showing that companies with diverse gender leadership tend to perform better.
Leading the portfolio management process is William F. Morgan, a Boston-based senior investment officer in wealth management, who credits “good, old-fashioned client demand” for spurring the development of the PWER Portfolio.
“The PWER Portfolio was the organic outgrowth of female investors and foundations in our Florida region asking their investment advisers about gender diversity,” Morgan said. The president of the Florida West Coast region, Lisa Simington, was a strong advocate for this investment approach; it took about three months of intense focus to get the portfolio up and running, though it evolved over a longer term.
The managed-account portfolio focuses on about 170 companies that passed a gender diversity and leadership screening and met BNY Mellon Wealth Management’s investment criteria. The diversity screening identifies companies that have a female CEO or a board of directors with at least 30 percent female representation. About 270 companies in the S&P 1500, a broad-market index, met these diversity criteria.
“Our goal was to create a risk-controlled portfolio that centers on well-run companies with diverse boards that are poised to increase in value over time,” Morgan said. The portfolio “allows people who embrace that approach to invest in a way that aligns with their personal beliefs and values.”
New Opportunities for Gender-Lens Investors
The PWER Portfolio is an example of gender-lens investing—a concept BNY Mellon endorsed in its March 2018 report on women’s financial inclusion, Powering Potential, released in partnership with the UN Foundation. The report, a companion to the January 2017 publication, Return on Equality, identified a wide range of ideas for expanding access to financial products and services designed to meet women’s needs as individuals, economic agents and entrepreneurs. In retail banking alone, expanding financial products and services to women could unlock an additional $40 billion in annual global revenue, the report found.
Gender-lens investing is the idea that one can invest for financial return while also giving weight to the benefits for women. Among its many recommendations, Powering Potential challenged institutional asset managers to design new investment offerings that “help lower the search and transaction costs for investors who are interested in integrating gender-lens investing into their investment strategies.” The report suggested that taking a gender-lens approach to structuring new banking products, investment strategies, funds and indices is a pragmatic way of steering capital to companies that practice financial inclusion.
Responsible investing, of which gender-lens investing is a part, is evolving from a niche to a significant force in investment management. “Eventually, I believe responsible investing won’t just be a subset of investing, but an integral part of all investment decisions in general,” Morgan predicted. Indeed, environmental, social and governance (ESG) concerns have already become important factors in evaluating the sustainability and ethical impact of investments, he said, adding: “Responsible investing is a mosaic, and it means different things to different people. The creation of new funds that have an ESG tilt has risen dramatically.”
Still in its infancy, the PWER Portfolio “has a lot of great buzz around it,” Morgan said. The minimum account size is $250,000. For now, it is being offered narrowly to existing wealth management clients.
Launching any new product requires intensive work to build and prove a case for it, and the PWER Portfolio’s compressed launch time of three months included careful deliberations by the wealth management team’s solutions strategies committee and other leaders, Morgan said. He added that it is garnering strong interest from high net worth professionals, including both women and men. It is also attracting attention from women’s foundations and other institutional investors, including pension funds. Institutional investors “have become really invested in socially-responsible processes,” Morgan said.
In designing the PWER Portfolio, BNY Mellon Wealth Management opted to keep the focus squarely on women-run companies and those with diverse boards, even though some gender-lens funds use broader metrics, Morgan said. For instance, some funds factor in qualitative factors such as whether a company has good diversity programs in general. But the consensus was to keep the metrics simple and completely objective. “We decided to capture leadership, because it’s measurable in objective terms, and because women-run companies and companies with diverse boards are good, sound investments,” Morgan said.
This white paper is the property of BNY Mellon and the information contained herein is confidential. This white paper, either in whole or in part, must not be reproduced or disclosed to others or used for purposes other than that for which it has been supplied without the prior written permission of BNY Mellon. This material is provided for illustrative/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Effort has been made to ensure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation. The Bank of New York Mellon, Hong Kong branch is an authorized institution within the meaning of the Banking Ordinance (Cap.155 of the Laws of Hong Kong) and a registered institution (CE No. AIG365) under the Securities and Futures Ordinance (Cap.571 of the Laws of Hong Kong) carrying on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities. The Bank of New York Mellon, DIFC Branch (the “Authorised Firm”) is communicating these materials on behalf of The Bank of New York Mellon. The Bank of New York Mellon is a wholly owned subsidiary of The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no other person should act upon it. The Authorised Firm is regulated by the Dubai Financial Services Authority and is located at Dubai International Financial Centre, The Exchange Building 5 North, Level 6, Room 601, P.O. Box 506723, Dubai, UAE. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon London Branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. The Bank of New York Mellon is incorporated with limited liability in the State of New York, USA. Head Office: 225 Liberty Street, New York, NY 10286, USA. In the U.K. a number of the services associated with BNY Mellon Wealth Management’s Family Office Services– International are provided through The Bank of New York Mellon, London Branch, 160 Queen Victoria Street, London, EC4V 4LA. The London Branch is registered in England and Wales with FC No. 005522 and #BR000818. Investment management services are offered through BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA, which is registered in England No. 1118580 and is authorised and regulated by the Financial Conduct Authority. Offshore trust and administration services are through BNY Mellon Trust Company (Cayman) Ltd. This document is issued in the U.K. by The Bank of New York Mellon. In the United States the information provided within this document is for use by professional investors. This material is a financial promotion in the UK and EMEA. This material, and the statements contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular strategy mentioned and should not be construed as such. BNY Mellon Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland BNY Mellon Investment Servicing (International) Limited is regulated by the Central Bank of Ireland. BNY Mellon Wealth Management, Advisory Services, Inc. is registered as a portfolio manager and exempt market dealer in each province of Canada, and is registered as an investment fund manager in Ontario, Quebec, and Newfoundland & Labrador. Its principal regulator is the Ontario Securities Commission and is subject to Canadian and provincial laws. BNY Mellon, National Association is not licensed to conduct investment business by the Bermuda Monetary Authority (the “BMA”) and the BMA does not accept responsibility for the accuracy or correctness of any of the statements made or advice expressed herein. BNY Mellon is not licensed to conduct investment business by the Bermuda Monetary Authority (the “BMA”) and the BMA does not accept any responsibility for the accuracy or correctness of any of the statements made or advice expressed herein. Trademarks and logos belong to their respective owners. BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation.
© 2018 The Bank of New York Mellon Corporation. All rights reserved. 135240
This post was originally published on Justmeans.com
Visit the Invest With Values - Resource Directory to access leading investor information, opportunities, organizations, events, groups and tools.