Green Alpha Launches Gender Diversity SMA
This strategy seeks to go beyond the board of directors
Originally published by Fund Intelligence, Private Asset Management (PAM) on May 24, 2018
By Max Viscio
Green Alpha Advisors has launched a gender-diversity themed separately managed account that aims to capture the benefits of women in leadership roles beyond the board of directors.
The strategy provides exposure to Green Alpha’s Next Economy Social Index, which includes 75 firms where women hold positions of significant authority, women have especially strong representation in leadership and/or have corporate policies that are overtly socially inclusive, according to the firm’s Form ADV.
The SMA’s index is a sub-universe of Green Alpha’s 95-stock Next Economy Index, which focuses on firms, across market caps and geographies, that aim to solve wealth inequality, natural resource degradation, and climate change issues.
The strategy has a $100,000 minimum investment and costs between 100 and 35 basis points, depending on the size of the account and whether the investor is using an adviser or not.
The new offering aims to build on the foundation Green Alpha laid with the Next Economy Index, which identifies firms with the best long-term potential, Betsy Moszeter, investment committee member and chief operating officer at Green Alpha, told PAM.
“The goal in this portfolio is to not just find companies that are innovating right now, but that have highest probability of remaining at the front of the innovation curve by having the most diverse teams they can find,” she said.
The impetus for the strategy began when Moszeter observed that most gender diversity strategies rely heavily on representation at the board of director level.
“Being a woman leader myself, I thought that was bizarre … While boards are important, what about the women in leadership making the day-to-day decisions on company culture, the strategic future of the company, and tactics?” she said. “I thought that was being overlooked.”
Green Alpha started incubating the new strategy with its own money back in 2015. Since that time, the portfolio has outperformed the S&P 500 Index by 220bps net of fees.
Moszeter told PAM that Green Alpha has recently started to incubate an actively managed gender-diversity portfolio, though she declined to go into further detail at this early stage.
The inception date for the Green Alpha Next Economy Social Index is December 30, 2015. For complete performance history and other important information regarding the Green Alpha Next Economy Social Index, please see the current portfolio snapshot.
Performance data quoted represent past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. The Green Alpha Next Economy Social Index portfolio performance quoted is net of fees and is based on the model portfolio. Performance of the Green Alpha Next Economy Social Index model portfolio includes reinvestment of dividends.
Model performance has inherent limitations. The returns shown are model results only and do not represent the results of actual trading of client assets. The model performance shown does not reflect the impact that material economic and market factors had or might have had on decision making if the account held actual client capital. Actual client accounts in this strategy are managed by Green Alpha based on the model portfolio, but the actual composition and performance of these accounts may differ from those of the model portfolio due to differences in the timing and prices of trades, and the identity and weightings of securities holdings.
The S&P 500 Index is an unmanaged index of 500 common stocks chosen for market size, liquidity and industry group representation. It is a market-value weighted index. The S&P 500 Index figures do not reflect any fees expenses or taxes. Investors cannot invest directly in this index.
Green Alpha portfolios may invest in companies with small and medium market capitalizations. Small or medium-sized companies may have more limited product lines, markets and financial resources than larger companies. In addition, their securities may trade less frequently and in more limited volume than those of larger companies. Small or mid-cap stocks may be more volatile than those of larger companies and, where trading volume is thin, the ability to dispose of such securities may be more limited.
Green Alpha portfolios may invest in foreign domiciled companies. Investing in foreign securities may involve certain additional risks, exchange-rate fluctuations, limited liquidity, high levels of volatility, social and political instability and reduced regulation. Emerging markets are often more volatile than developed markets, and investing in emerging markets involves greater risks. Given the potential increased volatility of Green Alpha strategies, an investment in Green Alpha portfolios should be considered a long-term investment.
This document is for informational purposes only and should not be construed as legal, tax, investment or other advice. It does not constitute an offer to sell or the solicitation of any offer to buy any security. Green Alpha Advisors, LLC is a registered investment advisor. Registration as an investment advisor does not imply any certain level of skill or training. Green Alpha is a registered trademark of Green Alpha Advisors, LLC. Please refer to www.greenalphaadvisors.com for more information.