New Mutual Fund Backs Companies Led By Women

Former Bank of America president Sallie Krawcheck has created the Pax Ellevate Global Women's Index Fund to support leadership diversity, and rebranded her women's professional network 85 Broads as Ellevate.

Wall Street veteran Sallie Krawcheck has taken the next step in her new career of helping women achieve more senior leadership positions in business, and supporting companies that advance women in their ranks. Her global women's professional network 85 Broads has been rebranded as Ellevate, and the company has created the Pax Ellevate Global Women's Index Fund (PXWEX), a mutual fund focused on investing in brands that have strong female leadership.

Krawcheck tells Fast Company that many expected her to launch a venture capital fund to invest in companies with women leaders, but accessibility drove Ellevate's decision to create a mutual fund, which has an investment minimum of $1,000. "You don't need a million dollars to get involved," she says. "It's great to get capital to these companies, but this is pretty immediate and anyone can get involved." Krawcheck says this is particularly important for a new generation of values-based investors, many of them women and millennials, who are giving strong indications that they want to invest differently.

"The investments in this fund are many of the global, brand-name companies that appeal to a broad audience of investors," Krawcheck said in an earlier statement. "Where these differentiate themselves, however, is with their success in advancing women in their ranks; for example, women hold 31% of board seats and 24% of senior management roles in companies in the fund, as compared to a global average of 11%. As women’s economic engagement and purchasing power continues to grow, we believe this type of senior-level diversity will matter even more. Many CEOs I speak to, of both genders, recognize this is no longer a woman’s issue, but a business performance issue. And this type of investing represents a markets-based solution to the very real business opportunity, and business challenge, of diversity. It’s capitalism at work and capitalism at its best."

The news comes not long after the release of the 2014 Gender Balance Scorecard, focusing on executive committee leadership (rather than corporate boards), which found that that of the 1,164 executive committee members of America's Top 100 companies, 83% are men—and two-thirds of the 17% who are women are in staff or support positions like HR, communications, or legal, rather than in operational roles. Europe and Asia's ratios are even more unbalanced, at 89% to 11% and 96% to 4%, respectively. At this point, finding a broad array of companies that even qualify for inclusion in the fund may present a challenge.

But demand, at least, exists. The fund's announcement highlights that a recent Center for Talent Innovation research report, "Harnessing The Power of the Purse: Female Investors and the Global Opportunities for Growth," noted that 90% of women globally said "making a positive impact on society is important," and 77% of women globally—and more than half in the U.S.—said they "want to invest in organizations with diversity in senior leadership."

"These findings show that this type of investing is moving rapidly beyond being a niche play, and they are resoundingly similar to what our Ellevate community members have told us in our surveys," said Krawcheck. "For modern investors, it’s no longer about looking to earn a fair return OR have an impact; it’s about earning a fair return AND having an impact."

In 2013, Krawcheck bought 85 Broads, a 30,000-strong global professional woman's network that represents 130 countries with more than 40 regional chapters and campus clubs. The organization was founded as a platform for Goldman Sachs employees and alumnae, the name coming from Goldman's former Broad Street location in Manhattan. The rebranding as Ellevate is a result of member feedback and a broader mission.

"Our choice of the name Ellevate not only gives a nod to the gender of our community," said Krawcheck, "it reflects our action orientation and underscores our broader commitment to the economic engagement of women."

[Image: Flickr user Georgie Pauwels]

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