One up-and-coming trend in impact investing is gender lens investment. According to Veris Wealth Partners, investment of this type has risen 41 percent in the past year, up to $910 million. In addition, the number of mandated publicly traded gender lens investment strategies has reached a total of 22, after 5 years of steady growth. This is an incredible increase from the years 1993 to 2012, when there were only 5 strategies for gender lens investing.
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A New Cambridge Associates Report, titled Gender Lens Investing: Impact Opportunities Through Gender Equality, claims that investing in the unique capabilities and perspectives of women can help investors not only address social issues in their communities but also receive strong financial returns. For instance, sales growth, earnings per share growth and return on assets are higher in companies in which women make up at least 50 percent of leadership positions. In addition, start-ups founded by women entrepreneurs gender 10 percent more revenue than those founded by their male counterparts.
Venture capital firms benefit from investing in women-owned businesses and those with a majority of women in leadership positions. According to the report, the performance of firms improves as the rate of investment in women-owned or women-led companies increases, even those these types of businesses often receive less funding.
When considering diverse resources for increasing wealth, family offices should consider getting involved in the recent trend of gender lens investment. This type of investment focuses on women by evaluating opportunities based on how a certain investment will facilitate the following concerns:
- Women’s leadership
- Women’s access to capital
- Products and services that help women and girls
- Equality in the workplace
- Shareholder engagement and policy work
- Women investing their own resources
If an investment satisfies at least one of these criteria, some wealth management companies believe it will have a positive impact on the economic opportunities and growth for women and girls.
It helps to have a diverse group of investors to identify the best investment opportunities with a gender lens. Having a variety of perspectives on one’s team can lead to better decision-making and performance. According to the report’s analysis of 37 female hedge fund managers, female-led hedge funds outperform a general sample of hedge funds over a ten-year period.