This week’s International Women’s Day has highlighted key challenges in encouraging women investors. eToro, the social investing network, has launched its new FemaleLeadership Smart Portfolio, offering investors long-term exposure to companies already exhibiting strong gender-equality credentials and awareness.
Research has shown that increasing the proportion of women in leadership positions has a positive impact on a firm’s profitability and also tends to enhance factors such as mentorship, collaboration, employee well-being, as well as diversity and inclusion initiatives.
eToro’s Deputy CEO and Global Chief Operating Officer (COO), Dr. Hedva Ber, says: “Female leadership and boardroom diversity have proven advantages, not just for company culture but also for business growth and development. The impact of these factors over the long term is not just a stronger, more resilient business with better processes and fresher thinking, but in turn better results for investors.”
Despite this, women only fill around 30% of director positions in the S&P 500, and the proportion is drastically lower when it comes to CEOs. As of 2021, only 6% of S&P 500 CEOs were women. Nevertheless, the number of women in executive positions and on boards of directors is rising, and eToro’s new FemaleLeadership portfolio has been constructed to capitalize on the advantages this brings to their respective firms and sectors.
The portfolio is composed of 35 US-listed companies from the existing eToro stocks universe, ranked according to a range of metrics including gender diversity, analyst consensus ratings, stock liquidity, and market capitalization. In order to qualify, at least 40% of both the company’s executives and Board of Directors must be women.
Dr. Ber adds: “To identify the best-performing stocks of tomorrow, investors must evaluate the processes and cultures that a company is putting in place today and determine who is truly equipped for tomorrow. Diversity of thought, skills and experience are the hallmarks of a business that is willing to evolve, to embrace new ideas and to react creatively to future challenges. All these characteristics have proven significance for long-term success.
“Gender equality is just one aspect of diversity, yet it is a crucial area where a great deal of progress needs to be made. That progress won’t necessarily be steady or obvious, and for people who don’t have the time to scrutinise the ongoing developments within each industry, the market may seem overwhelming. With a ready-made, diversified portfolio of companies, we will be doing the heavy lifting and enabling our customers to engage with this progress in a simple and responsible way.”
The initial allocation of eToro’s new FemaleLeadership portfolio is weighted more heavily towards the consumer and communications sectors, with a particular focus on retail and internet companies, as per the ranking model mentioned above. The composition includes familiar brands whose leadership teams have made important progress on the road to gender equality, including Disney, GAP, Uber, Paramount Global and Hewlett-Packard. The full allocation can be found here.
The launch of this portfolio is part of eToro’s wider initiative to support women in business, finance and investing. eToro recently launched InvestWithHer, an online community designed to encourage more women to consider investing.