While estimates are frighteningly low for the percentage of financial assets under management by women and minorities, that number is destined to change. Leading the charge for this change as one of the few women-owned asset management companies is ThirtyNorth Investments, headed by Suzanne Mestayer, Managing Principal, and Blair duQuesnay, Principal and Chief Investment Officer.
How did Mestayer and duQuesnay become gender lens investors? They were basically convinced by the business case for more women in corporate leadership. “It was an interesting confluence of increasing our knowledge on the topic of women in governance, and learning about how few women are on corporate boards,” said Mestayer in a recent interview with Philanthropy Women. “This coincided with our acknowledgement of our own experiences serving on boards, and seeing the benefits of having diversity on those boards.”
The more Mestayer and duQuesnay researched about the benefits of women’s leadership in business, the more they learned that the news was good. “We realized that if in fact companies with board diversity are performing better, then perhaps there is an investment strategy that not only provides visibility and attention, but also provides real financial reward for investors.”
ThirtyNorth has done its own gender lens investing research, which is coming out in the August issue of Investments & Wealth Monitor. “In doing our research, we were coming to the same directional conclusion, that board diversity correlated with better company performance,” said Mestayer.
So ThirtyNorth developed a unique strategy that weighs stocks for both financial performance and gender diversity on boards and in executive leadership. “We seeded it in April of last year, and we’re very happy to see the level of interest and attention it’s getting,” said Mestayer.
“Being two women who are asset managers, the research really resonated with us,” added Blair duQuesnay, who leads ThirtyNorth’s investment committee and bears the responsibility of researching the firms strategies. duQuesnay has been frequent commenter in The Wall Street Journal, Forbes, InvestmentNews, and Business Insider.
“We know that there are so few asset managers who are women. It’s even smaller than the 20 percent we’re trying to see on boards. Morningstar estimates that less than 10 percent of mutual funds are run by women, and less than 2 percent of industry assets are managed by women, so it really resonated with us personally when we read this research and developed the strategy.”
ThirtyNorth’s product is called the Women Impact Strategy, and it allows investors to reap the potential benefits of 50 company stocks that are leading the way in terms of gender representation on corporate boards and in executive leadership. The collection of 50 stocks has been rigorously screened and balanced for diversity and women’s leadership on boards, as well as diversity across sectors of the economy, in alignment with the Russell 3000 Index. It’s a unique — and hard to find — product in today’s financial markets.
“One of the realities of the industry is that many times, people are learning about other investment opportunities that align with their values, but they’re not necessarily hearing it from their existing financial advisors,” said Mestayer. “They’re either bringing it to the attention of their advisor, or they are taking some of their money and placing it differently.”
ThirtyNorth is looking to be one of those places where investors go to place their money differently, and be rewarded for understanding the value of women’s leadership in business.
“The information on the number of women who are interested in investing on social motivated issues is pretty astounding,” said Mestayer, citing research from the Center for Talent Innovation. “90% of women were interested in making a positive impact 77% specifically want to invest in companies with diversity in leadership. Those are very powerful numbers because women are making decisions on about $11 trillion of investment assets in this country. So it’s a very powerful amount of investment and number of women who are interested in an investment approach like ours.”
It’s not just the consumer interest that makes this product so important — it’s the end result. One end result is companies that have better decision-making and therefore better performance. Another end result is companies that are healthier work cultures for women, providing role modeling and more perceived opportunities for their women employees who want to move up the corporate ladder. The products and services of these companies, as well, tend to attract diverse consumers.
It’s the synergy of all of these social changes being boosted by the Women Impact Strategy that make it an exceptional product. So how can more foundations, especially those with a mission to move the needle on gender equality, get on board? “I would suggest that foundations do a search to see what is available in the gender lens investing sphere and have conversations with a number of providers,” said Mestayer.
The lower threshold for investing in the Women Impact Strategy is $250,000, so this is a service built for high capital entities like foundations. “We have a very diversified mix of companies — large, mid, and small, some international — and so it’s a good fit for any foundation that is looking to allocate their stock portfolio with a gender lens,” said duQuesnay.
Mestayer emphasized that in the foundation world, there is still a lot of misinformation about the relative value of gender lens investing. “Many times, foundation board members have said ‘we know we’re making grants for philanthropic purposes and the return on investment in real dollars is not always there, but with the money we invest, we can’t afford to invest it in a way that gets sub-par returns.”
But the compelling thing about gender lens investing is the growing body of evidence that it’s actually a financially sound way to approach investing. “Financial returns do not need to take a back seat to moving forward on social issues,” said Mestayer. “In fact, you can succeed by doing both at the same time. That’s the most exciting part of watching this develop. Financial returns are not taking a back seat. That myth needs to be debunked.”
And, it’s not just women who are interested in the Women Impact Strategy. “We are often discussing our product with men, and many men will talk about how, through their personal relationships, they have seen the issues women have encountered over the years, and they genuinely see the benefit of supporting a gender lens approach,” said Mestayer.
ThirtyNorth’s new Women Impact Strategy picks up on an important global phenomenon: The more economies recognize women as the key point of contact for growing business, the more chance we all have to succeed. Mestayer and duQuesnay are part of a growing ecosystem of women’s leadership in financial sector that may, in time, produce more financial stability for everyone.