I’ve talked in the past about how I used to be an impact investing skeptic. “Don’t give up returns,” I would have said, back during my days at traditional Wall Street firms. “Focus on earning the highest returns you can. You can make an impact by donating some of it later.”
The industry has since matured. (And so have I.) Today, I recognize that we can invest for positive impact without necessarily giving up financial returns. So you could have a positive impact on the things that matter to you now — and, of course, still donate later if you want.
And the way I felt about impact investing back in the day: Well, ditto for gender-lens investing. Invest with a consideration of gender? Seriously??
Once again, the industry has matured, and so have I. (And I don’t believe it’s immodest for me to note that the innovative work being done by Ellevest’s Chief Investment Officer, Dr. Sylvia Kwan, has helped move gender-lens investing forward.)
This might surprise you, but today all investors are “gender-lens investors,” even if we’ve never heard the phrase.
It’s just not usually the gender you think.
Today, most of us invest overwhelmingly in men: in the stocks of Fortune 500 companies run mostly by men, in the debt of the companies of the Fortune 1000 run mostly by men, in venture capital investments where more than 97% of dollars go to companies founded by men.
That said, a central tenet of smart investing has historically been diversification: not putting all of one’s eggs in one basket — not in one stock, not in one type of investment, not in one industry, not in one country.
So why would we want to invest mostly in one gender?
And why would we want to invest mostly in one gender when so many positive things happen when we get more money in the hands of women??
Companies with diverse leadership are more successful. When companies’ leadership teams have more women on them, those companies are more profitable, less risky, and more innovative.
Start-ups with at least one woman co-founder perform 63% better.
So investing in women can be a win for all of us.
And it can be a win for women more broadly. Say we drive more of those venture dollars to women … that’s good for those women founders and their employees. And it’s good for the funds that invest in them. Those higher returns from investing in women can drive the “pattern recognition” that so many venture capitalists use to choose their investments, and lead to their investing in even more women-run companies. And since women entrepreneurs often start companies to solve problems for themselves and other women — think Bumble, Rent the Runway, The Honest Company, Ellevest — the positive ripple effect for women continues and grows.
As we like to say at Ellevest, everything you do with your money has an impact.
In 2021, those who invest for impact with us — Ellevest members and Private Wealth Management clients — are investing to advance women and to make positive change in the world.
When you become an Ellevest member, our Ellevest Impact Portfolios are a powerful form of gender-lens investing. And for Ellevest Private Wealth clients, you can choose to invest money in companies that meet our criteria for doing the right things by women — and redirect money away from companies with products, policies, and practices that may harm them.
Investing with a gender lens can be, in my opinion, one of the most important impacts we can choose to have.