Gender diversity is the big return bet for new Nordea equity fund

A study from 2018 by Nordea showed a connecting between women in management and corporate earnings stability. The financial group has now launched a global gender diversity strategy, targeting gender quality -- not just women in top positions.
Photo: Colourbox
Photo: Colourbox
Bloomberg/Jonas Cho Walsgard

Gender equality delivers higher returns. That’s the premise of a new fund Nordea Global Gender Diversity Fund started in February and is managed out of Bergen and Copenhagen by Audhild Aabo and Julie Bech.

"Historically, companies that have more gender equality have had better return,” Aabo said in a phone interview this week.
Including women in management linked to corporate earnings stability
Calculations by the bank show that companies in its gender diversity universe, roughly about 1,500 firms, had a return of 130 percent from the start of 2009 through September last year, beating the MSCI ACWI index by 8 percentage points. Women participation is seen as key in a broader context in many countries where men have long dominated economic life.

Money managers at Nordea have also in the past studied how companies that are run by women fare. The evidence there has been clear: they perform better than companies managed by men

The portfolio management duo select companies to invest in after setting a gender diversity score. It’s based on factors such as gender equality at the management and board level, equal pay and how equality has developed over time as well as analysis of other policies to promote a more level playing field between the genders.

"We’re looking for companies that are permeated by gender equality," Aabo says. "It’s more about gender equality than only women in top positions."

So far, the fund only has 8 million euros of seed money under management, but it has close to 100 holdings. Among the companies that have made the grade are Microsoft Corp., Cisco Systems Inc., Home Depot Inc. and L’Oreal SA.

"L’Oreal is a company that has worked a lot with gender equality for many years," Aabo says. "They have very good policies in place to promote gender diversity. At the same time, they have a good representation of women."

Aabo's and Bech's scoring, however, shows that most companies still have far to go. L’Oreal is one of the companies with the highest gender diversity score in its sector, but still only reaches 3.5 points on a 7-point scale. The median score of the about 1,500 companies they have analyzed is only 2.

"The companies, even those in our universe, still have some way to go," Aabo said. "Even some of the good companies score on the middle of the scale, although they score above the sector average."

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