Gender Lens Investing: Q&A with Eve Ellis, Financial Advisor and Portfolio Manager in The Matterhorn Group at Morgan Stanley
Eve Ellis, Financial Advisor and Portfolio Manager in the Matterhorn Group at Morgan Stanley, discussed the topic of gender lens investing in a recent interview with US SIF: The Forum for Sustainable and Responsible Investment. This emerging approach to investing centers on research showing that increased diversity and a more inclusive workforce are indicators of strong financial performance. Eve Ellis explains more.
US SIF: What is gender lens investing and what does it seek to achieve?
US SIF: Why should investors be interested in gender lens investing?
Eve Ellis: Our investors really want strong returns and they really want to have a strong social impact. As an example, one of our investors in the Gender Parity portfolio who definitely wants to grow his assets said to me “This is the first time I'm not being a passive investor.” So investors are really looking to have a positive impact and grow their assets.
US SIF: What kind of sustainable and impact investment opportunities are available for high-net-worth individuals and family offices for these markets?
Eve Ellis: We started the Gender Parity portfolio over three years ago and at the beginning of this year we started a new strategy called our Diversity and Inclusion strategy. In it, we are looking at 24 metrics connected to diversity and inclusion issues in companies. In third-party back-testing of our investable universe for our Diversity and Inclusion strategy, there was meaningful outperformance over the last three years. So in addition to the Gender Parity Portfolio, our Diversity and Inclusion strategy is also available. For high net-worth and family office clients we could build a sustainable portfolio for 90% to 100% of their portfolio if that's what they would like. Or for some clients, it may be a portfolio that’s 60% to 70% sustainable. It depends on the client’s needs because we always need to be very tax aware when we are converting a portfolio from a traditional one to a fully sustainable one.
US SIF: Are you finding increasing interest in gender lens investing?
Eve Ellis: There's definitely an increase in interest especially as the old-fashioned adage that an investor needs to sacrifice financial returns for social returns is disappearing. The new generation of investors knows that you can have both financial returns and social returns.
US SIF: What is gender lens investing and what does it seek to achieve?
Eve Ellis: Our investors are committed to changing the world through gender lens investing. We seek a fairer world – one in which the genders are treated equally. Yet we are also seeking strong financial returns and I would say we are even seeking to outperform based on what I would call the “Diversity Advantage.” Diverse teams outperform. So in our Gender Parity portfolio we are looking at a gender metric just the way we would look at financial metrics. When doing our company stock selection, before looking at the company’s financial strength, financial metrics or management strength, we are looking at a specific gender metric. In this case it is the composition of boards. We're only investing in companies that have a minimum of three women on their boards.
US SIF: Why should investors be interested in gender lens investing?
Eve Ellis: Our investors really want strong returns and they really want to have a strong social impact. As an example, one of our investors in the Gender Parity portfolio who definitely wants to grow his assets said to me “This is the first time I'm not being a passive investor.” So investors are really looking to have a positive impact and grow their assets.
US SIF: What kind of sustainable and impact investment opportunities are available for high-net-worth individuals and family offices for these markets?
Eve Ellis: We started the Gender Parity portfolio over three years ago and at the beginning of this year we started a new strategy called our Diversity and Inclusion strategy. In it, we are looking at 24 metrics connected to diversity and inclusion issues in companies. In third-party back-testing of our investable universe for our Diversity and Inclusion strategy, there was meaningful outperformance over the last three years. So in addition to the Gender Parity Portfolio, our Diversity and Inclusion strategy is also available. For high net-worth and family office clients we could build a sustainable portfolio for 90% to 100% of their portfolio if that's what they would like. Or for some clients, it may be a portfolio that’s 60% to 70% sustainable. It depends on the client’s needs because we always need to be very tax aware when we are converting a portfolio from a traditional one to a fully sustainable one.
The new generation of investors knows that you can have both financial returns and social returns.
US SIF: Are you finding increasing interest in gender lens investing?
Eve Ellis: There's definitely an increase in interest especially as the old-fashioned adage that an investor needs to sacrifice financial returns for social returns is disappearing. The new generation of investors knows that you can have both financial returns and social returns.