Market Health

Top 3 Ways to Track the Effect of Female Leadership on the Markets

Much of our national energy has been devoted to the 2020 presidential and congressional elections… and the uncertainty that has followed.

That chaos came to a head with yesterday’s violence. But this bitter rivalry needs to end. It’s a new year, and it’s time to move forward.

2021 should be about unity, synergy, opportunity and prosperity – for both the country as a whole and individual investors.

And it all starts on January 20.

In two weeks, Joe Biden will be sworn in as president of the United States and Kamala Harris will become the first female vice president.

The spotlight will, understandably, be on Biden… but today, I want to focus on Harris.

A growing mountain of research suggests that having a woman in the White House could be “huuuge” for the U.S. stock market.

So today, I’ll show you how to position your portfolio for this historic change.

The Real Wonder Women

Currently, the number of female CEOs managing Fortune 500 companies is at an all-time high. Though that number is still small at just 37 women.

More broadly, a 2019 study reported that for every female CEO there are 19 male CEOs. But here’s where things get interesting…

The stock prices of companies that appointed female CEOs outperformed those of male-led firms by an average of 20%!

Plus, companies with female chief financial officers generated excess profits of $1.8 trillion.

Another analysis looked at the returns of Fortune 1000 companies under female leadership over a 12-year span. This group tripled the returns of the S&P 500 over the same period!

And that research is just the tip of the iceberg.

According to Kiplinger, companies actually shoot themselves in the foot by having a lack of diversity. Those that have poor gender, ethnic and cultural diversity were 29% less likely to report above-average profitability.

Companies with fewer women on their boards generated less growth. And diversity was actually quantified as being worth up to $390 billion in market value!

These findings are not to be ignored. There’s a reason these statistics exist… and there’s a strong correlation between having women in charge and profitability.

It’s not the mere presence of female leadership that magically boosts returns. Rather, companies with women in charge are more likely to value diversity and gender equity.

These cultural characteristics foster higher employee satisfaction and create a positive workspace. And one way that productivity is measured is through a strong financial performance.

Not only do firms with more women in management financially outperform their male-led counterparts…

But industries with greater levels of gender diversity are also more profitable.

And, on an even broader scale, there is a correlation between having a large female workforce and a country having a greater GDP per capita.

Higher-income countries (such as the U.S.) tend to have an increased focus on women’s education and decreased fertility rates. This enables more women to seek employment and contribute to a country’s economic output.

Harris’ appointment (and victory) is a reflection of a diverse population that values tolerance and inclusivity.

And, as you can see, those characteristics are proven drivers of financial prosperity on the company, industry and national levels.

Betting on Biden-Harris

With all that in mind and more, I’m not alone in thinking that the next four years will be strong ones for the American economy.

After all, both sides of the aisle want to see fast economic growth after a devastating 2020.

That’s why I’m going to keep an eye on these three funds…

Womens Leadership Funds Since the Election

The SPDR SSGA Gender Diversity Index ETF (NYSE: SHE) tracks the index of the same name, which comprises companies that demonstrate gender diversity within senior leadership.

The Fidelity Women’s Leadership Fund (Nasdaq: FWOMX) invests in companies that “prioritize and advance women’s leadership and development.” These firms have a woman in a senior management position, are governed by a board where at least one-third of members are women or have adopted policies that promote women’s causes.

Lastly, the Barclays Women in Leadership ETN (CBOE: WIL) tracks its corresponding index, comprising companies that either have female CEOs or are governed by boards where at least 25% of members are female.

There’s no reason the markets need to wait until January 20 to kick-start these women-powered funds.

In fact, women will succeed – and lead profitable businesses – regardless of who occupies the No. 1 or No. 2 seat in the government.

But I believe we’ll see a healthy boost in female-led companies in the months and years ahead.

Harris is stepping into uncharted territory for a woman… and investors can certainly position their portfolios to profit on what could be a turning point in American politics.

Good investing,

Rebecca

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