A meeting of Christopher J. Ailman, CalSTRS chief investment officer, and Kristi Mitchem, then an SSgA executive vice president, on the dais of the 2015 Milken Global Conference has resulted in the launch of an exchange-traded fund that focuses on gender diversity in the workplace.
The panel discussion on the underrepresentation of women in financial services gave rise to a core large-cap ETF — SPDR SSGA Gender Diversity Index ETF. The ETF invests in public companies with higher levels of gender diversity in senior leadership than other publicly traded companies.
The $178.7 billion California State Teachers' Retirement System, West Sacramento, seeded the ETF with an initial $250 million, Mr. Ailman said in an interview. June Kim, director of global equity at CalSTRS, suggested the ticker symbol —SHE, he added.
The investment is in CalSTRS' enhanced index equity portfolio, which Ms. Kim oversees. It will be up to Ms. Kim to decide whether to recommend that CalSTRS increase its investment in SHE.
SHE began trading on April 4 and now has $275 million in assets, according to Morningstar Inc.
“Our goal is to manage an index in-house that follows the methodology,” Mr. Ailman said.
Indeed, the idea is to run a series of enhanced indexes in-house that not only includes investment in companies that promote women, but also areas such as sustainability and low carbon emissions, Mr. Ailman said.
“We're putting our money where our mouths are,” he said.
The SHE ETF is a way of pushing companies to have better diversity on their boards, Mr. Ailman said.
Top holdings in the ETF so far include Berkshire Hathaway Inc., The Home Depot Inc., Oracle Corp., Amgen Inc. and CVS Health Corp., according to Morningstar.
The number of women at top spots at companies hit a plateau in the 1990s, said Jennifer Bender, Boston-based director of research for global equity beta solutions, the passive equity arm of State Street Global Advisors.
There are fewer women in higher level positions today than in 2008 in the U.S., Ms. Bender said. Recent advances have been made in Europe but not the U.S., she added.
“There have been important gains in Europe. A number of countries have passed minimum levels of female board members,” Ms. Bender said.
When SSgA executives were creating the index, they wanted to focus on women across senior management levels. What they have found is that there is a lot of variation across sectors. The lack of women in top positions is most obvious in technology and energy. Consumer staples and consumer discretionary tend to have more women in senior positions.
No publicly traded hedge funds or other alternative investment managers made the cut, Ms. Bender said.
“Getting diversity in private equity and real estate is really hard to do,” noted Mr. Ailman.
SSgA is putting its money where its sentiments are. SSgA is donating a portion of its revenue to non-profit organizations that help girls learn to be leaders in business and science, Ms. Bender noted.
“We really believe in promoting women,” she said. “It makes sense to have this vehicle out there.”
This is also SSgA's first foray into self indexing, which is when a manager creates its own index instead of using a third-party provider.
Still, investors did not expect a firm with the relatively conservative reputation of SSgA to come out with an ETF aimed at gender diversity in the C-suite of large companies, Ms. Bender said.
“We are willing to be innovative and think about what make sense today,” she said.
