What is SHE? (Pros, Cons, and Strategies)

With increasing awareness around gender diversity and equality, conscious investing has gained momentum. Investors now have the opportunity to support gender diversity within organizations while potentially achieving financial returns. One way to do this is through SHE (SPDR MSCI USA Gender Diversity ETF). In this blog post, we will delve into what SHE is, its advantages and disadvantages, and strategies for investing.

What is SHE?

SHE is a unique ETF designed to promote gender diversity across the workforce by investing in companies that demonstrate a strong commitment to gender balance. SHE stands for SPDR MSCI USA Gender Diversity ETF.

SHE tracks the MSCI USA Gender Diversity Select Index, which focuses on U.S.-based companies that exhibit leadership in advancing gender diversity at the senior executive level.

Key Features of SHE

• Focus on gender diversity at the senior management level
• Companies with a notable gender diversity score in the index
• Alignment with growing societal emphasis on diversity, equity, and inclusion (DEI)

This ETF provides investors with exposure to companies that are leading the way in gender diversity, making it a compelling option for those looking to align their investments with their values.

SHE Composition

The ETF comprises companies across various sectors that demonstrate a balanced representation of genders, particularly within the senior executive team. It includes well-known companies such as Johnson & Johnson (JNJ), Visa (V), Procter & Gamble (PG), and Walt Disney (DIS). These companies excel not only in their business sectors but also in their commitment to gender diversity.

Pros of SHE

Socially Responsible Investment

SHE allows investors to support gender diversity, mirroring their personal values in their investment choices. By investing in SHE, one can contribute to the broader movement of fostering equitable work environments.

Diversified Portfolio

SHE spreads investments across a wide range of industries, offering diversification benefits. This diversification helps in reducing the risk associated with investing in a single sector.

Positive Brand Association

Companies with strong gender diversity are often viewed favorably in the eyes of consumers and stakeholders. This positive perception can translate to long-term benefits for these companies, potentially leading to better stock performance.

Cons of SHE

Niche Focus

While the focus on gender diversity is commendable, this niche approach may limit the companies available for investment. This could somewhat constrain the potential for broad diversification compared to a more generalized ETF.

Potential for Lower Returns

The emphasis on gender diversity might lead to the exclusion of companies that do not meet these criteria but have strong financial performance. Thus, in some market conditions, SHE may underperform broader market indices that do not consider gender diversity as a criterion.

Higher Expense Ratio

Compared to some other broader market ETFs, SHE's expense ratio can be relatively higher, reflecting the costs associated with its specialized focus. This could impact long-term returns.

SHE Investment Strategies

Investing in SHE requires a strategy that aligns with the ETF’s unique focus and objectives. Given its niche investment area, there are specific considerations investors should bear in mind.

Long-term Investment Strategy

For those committed to the principles of gender diversity, a long-term investment in SHE can be rewarding. Companies that prioritize gender diversity may perform better over the long run due to varied perspectives leading to innovative decisions and policies.

Complementary Investment

While SHE is valuable for its social impact, it might be beneficial to use it as a complementary investment within a broader portfolio. Combining SHE with other diversified ETFs can help manage risk and ensure overall portfolio robustness.

Regular Monitoring

Given that SHE targets a specific aspect of corporate governance, it's important to regularly monitor the ETF to ensure it continues to meet its gender diversity criteria and financial performance expectations.

Conclusion

SHE stands as a powerful tool for investors who wish to promote gender diversity while also seeking potential financial returns. Its focus on companies that champion gender diversity aligns it well with socially responsible investing trends. However, it's essential to consider its niche focus, potentially modest returns, and higher expense ratios before making an investment decision.

By combining SHE with other diversified investment strategies, one can craft a well-rounded portfolio that not only aims for financial growth but also contributes to meaningful social impact. As with any investment, thorough research and consideration of one's financial goals and values are critical.