Axa Investment Managers (Axa IM) has revealed it will integrate a unique gender diversity variable to its Sustainable Equities Fund, following new research that found, on average, diverse companies are more profitable than their less diverse peers.
Conducted by Rosenberg Equities, the research also revealed the profitability advantage of more diverse firms is consistent over time and became especially pronounced from 2009 to 2011 when the United States market’s aggregate profitability dramatically dipped.
The Sustainable Equities Fund is open to wholesale investors, including SMSFs, via most wealth platforms.
Axa IM head of Australia and New Zealand Craig Hurt said the manager will apply the gender diversity variable to the fund before the end of the year.
“We have a variety of different variables for the fund and we’ll be adding gender diversity as an additional variable; it will be factored into our decision-making process,” Hurt told selfmanagedsuper.
“From a portfolio construction point of view, there will be some stocks where their gender diversity provides that profitability moat versus some that don’t have the diversity.
“We’re very excited because the data is there. It’s no longer possible for the investment community to say the data’s not there and we think we have an obligation to use it.”
He revealed the appeal of the fund for SMSFs is the price point.
“It’s 35 basis points for an active fund that is defensively positioned,” he said.
“I believe the fees that are charged in the investment management industry in Australia are way too high, so we use our scale globally and also we want to make sure that investors can access attractively priced funds so they can retire with dignity.
“The fund also speaks to those investing in SMSFs who recognise the value from the research, and there’s significant interest in understanding it.”
At the recent annual Rosenberg Equities Roundtable Series in Sydney, Rosenberg Equities head of sustainable investing Kathryn Mohan McDonald said there is a very strong case for gender diversity, but companies “must be given ways to get past very entrenched boards”.
“There are many other levers that can be used in order to get a diversity effect into the portfolio, and there are a lot of initiatives on the part of big investors but also collations of like-minded investors who are pushing for greater diversity,” McDonald noted.
“Companies are being approached or ‘set upon’, but I think if they’re worried about profitability, I think it’s a good thing if we can come to them with something tangible [in the form of the research] as a good reason to do it.
“And in certain markets, this could be the argument that will win the day.”
Rosenberg Equities Europe chief investment officer Gideon Smith added the interest in gender diversity within companies varied from country to country and region by region.
“Just from the engagement side, there are countries that are more receptive and there are the ones that are more regulatory-led versus having a more positive, proactive way to make a case,” Smith noted.
Axa IM is the parent company of Rosenberg Equities.