Can women retire successfully if they were to invest in gender equity? It’s well known that women and, even worse, black women suffer a pay gap compared to white men. It’s also reported that women tend to be more interested in ESG investing (Environmental, Social, and Governance), but not specifically gender equality.
If you’ve read any of my articles on values based financial planning and investing, you will read that I believe that everyone should build a financial plan aligned with their values. That said, I know that some people, even women, are also very concerned if they’ll actually be able to retire by investing in gender equality. This is the first, of my series of posts for March 2022, that will examine this very issue.
Resources to learn about funds that have positive scores on gender equality
In order to help my clients with this, I choose to invest in the Morningstar Sustainability Ratings and in YourStake. We also use this publicly available resource for As You Sow’s, Gender Equality Funds.
If you browse “Gender Equality Funds” and select “Top Scoring Funds”, you will find 10 listings with an A grade.
Several of the mutual funds have multiple share classes of the same fund. One fund is the Calvert International Equity Fund.
Mutual funds can have multiple share classes. The share class is simply the way that the mutual fund assesses the costs of operating the fund to different distribution channels. For example, a roll of toilet paper at 7-Eleven typically costs more than the same item in bulk at Costco.
If you click the Get More Funds button at the bottom of the list, you will find that there are more funds with A grades. The Gender Equality page is not telling you exactly what to invest in. Rather, it is simply telling you what grade it assessed.
Each of these funds may fall into a different category. If you select financial performance, you will see more information on the mutual fund.
While you may want to pick just one of the mutual funds, if you were to build a diversified portfolio, you would likely want to look at funds across different share classes from large-cap United States mutual funds, small-cap United States companies, international large-cap, emerging markets, etc.
Given that you have your own investment recipe, you could look at each of these funds and then decide which one to put in the recipe in the recipe’s suggested proportion.
Most people are concerned with more than gender equality.
If you’re going to use the gender equality ratings, I recommend that you also select the other issues next to the performance numbers. It appears that an A student in one subject does not make you an A student in all subjects.
It’s a bit shocking to see that using As You Sow’s methodology, the Calvert mutual fund gets a D grade for weapons exposure. Weapons may not be an issue for you, but if it is you likely want to know this about a fund you choose.
I recommend that you do your own investigation as one research company may give a fund a different grade for the same category. That’s one of the reasons that we use Morningstar’s Sustainability Ratings and YourStake’s tools for advisors.
If these other issues are important to you, you can go to You Sow’s sister sites, for example, prison-free funds. As I discussed in my article, “Are You Unknowingly Investing in Private Prisons?” you may want to dig deeper into their assessment.
For example, I once spoke with a company that stated they had biblical values. I also discovered that they had a private prison holding! They felt that because the holding was based on real estate and not on operations, it was “OK” to do so. My client felt otherwise.
What about passive or index investing into the S&P 500? I will cover that in my next article!
So, can you actually retire via passive investing in gender equality?
The short answer is, yes. That answer does, however, involve calculating how much you will/can spend and then being able to save long enough. Can you intertwine a focus on Gender Equality? Yes!
Depending on your investing philosophy, you can select either a single solution or develop a diversified portfolio. I don’t recommend jumping on the first one on the list. Jumping out at the first sign of decline in return percentage is not a good idea.
I encourage you to:
1. Spend the time to learn more about risk-adjusted return investing or
2. find a qualified professional that does.
While they don’t have to be a Certified Financial Planner or Chartered Financial Analyst, I think that’s a good start. What if they start to tell you why investing in your values isn’t a good idea? You can either show them this resource or find another advisor. Most investment professionals are quite undereducated in the area of investing in gender equality.
Others work at companies that don’t allow their financial advisors to access all of the mutual funds and exchange-traded funds listed through As You Sow. Still, others aren’t investment adviser representatives, which limits their choices based on the mutual funds with share classes I discussed earlier.
I believe investing in companies that promote gender equality is a necessary step in gaining gender equality. Here’s to your gender equality-powered retirement!
