Contributor: Kristen Fricks-Roman
Company: Morgan Stanley Wealth Management
Title: Financial Advisor
A growing number of investors (especially women and millennials) are exploring socially responsible investing. In fact, interest has grown substantially with a 76% increase in 2014. Socially responsible investing is a popular strategy for those looking to align their core values with their investments. Among approaches such as faith-based investing or fossil-fuel divestment is gender diversity investing – another option for investors.
Investment strategies that utilize gender diversity criteria are growing in size and sophistication. Data from The Forum for Sustainable and Responsible Investment showed investment funds incorporating the consideration of diversity and equal employment opportunity nearly tripled in number and assets between 2005 and 2014.
Investors who want to take actionable steps toward a gender diversity approach to investing can do so in a variety of ways.
Gender Diversity Investing
- Gender Diversity as a Screen – Investors can integrate gender diversity criteria to screen companies. For example, identifying companies with poor gender diversity records prior to making an investment decision may decrease your exposure to certain long-term risks.
- Gender Diversity Leaders – Investors may also want to allocate capital invest in companies that have strong gender diversity policies, programs, diverse boards, and work/life balance programs.
- Gender Lens Investing – For a more targeted approach, investors can allocate capital to companies or strategies seeking to drive solutions to create greater gender equality through workplace equity (including support for women entrepreneurs and business owners), access to capital for women and producing products and services that benefit women and girls.
- Shareholder Engagement – An effective tool in driving better outcomes across all approaches would be to proactively engage with publicly traded companies whether through proxy voting or filing of resolutions and ongoing dialogue.
- Manager and Strategy Selection – Investors may choose portfolio managers or investment firms that are women and/or minority owned when seeking to advance gender diversity.
More and more individuals are deciding to invest in ways that promote positive social change. Socially responsible investing offers these investors the opportunity to customize their strategies, themes and goals while supporting positive causes. It’s important to be mindful that the integration of gender diversity criteria – or any socially responsible criteria – into an investment portfolio should be considered alongside traditional asset allocation and overall investment strategy decisions. If you are interested in socially responsible investing, consult with your financial advisor.
Kristen Fricks-Roman CFP®, CRPS®, is a financial advisor and senior vice president at Morgan Stanley Wealth Management, Atlanta. She can be reached at [email protected].
The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney, LLC, member SIPC.