Advisers mixed on Helena Morrissey’s Girl fund

Has LGIM struck a blow for equality with its Girl fund and maybe more importantly, will advisers respond?

Helena Morrissey


The firm says the L&G Future World Gender in Leadership UK Index fund will invest in stocks from the FTSE 350 based on how they score on four gender diversity measures. It is looking for a minimum of 30% representation of women on the board of directors and among women executives, women in management and women in the workforce.

Firms will be ranked between -1, the worst companies, and 1, the best, with zero being neutral informing how the fund is tilted. The index will be re-balanced every six months while LGIM will aim to encourage improvement in the various diversity measures by engaging with firms.

Helena Morrissey, the head of personal investing at LGIM, and an outspoken advocate for women says: “Data shows that companies with more diverse senior management perform better and companies that have been robust on this have improved returns. We hope to deliver good returns after fees.”

Many advisers have welcomed the move.

Claire Walsh, chartered financial planner with Aspect 8, says: “I think this is a great idea, I’m aware of one fund in the US like this, but this is a first in the UK.

“I’m a huge fan of Helena Morrissey and in launching this fund L&G are really putting their money where their mouth is. This is could be very popular with self-investors and would also be a good candidate for an ethical portfolio.”

Who cares?

Some fund experts are a little more circumspect.

Graham Bentley, managing director at consultancy gib2, says: “There are two issues here – will the fund perform better than its ‘unbiased’ UK index fund equivalents, and would potential investors care? Bentley adds that in essence this is a factor fund.

“Its impact on the secondary market, and the likelihood that companies would change their stance at L&G’s behest, is questionable.  If money was being provided to fund start-ups that championed diversity, it would be more significant, but since the index has 350 existing companies in there, that’s moot.”

“One wonders to what extent this is a crusade, versus satisfying a perceived demand from sympathetic investors, or a pragmatic decision to take advantage of a perceived long-term investment opportunity. It’s a fine start for sure, and it will be interesting to see whether this is the catalyst for significant change in attitudes, or merely a niche product. I should add we said that at M&G in 1994 when we created the first Corporate Bond fund!”

ESG investors

Some advisers question how the fund will fit with existing ESG criteria.

Worldwide Financial Planning IFA Nick McBreen says: “To cut to the chase here, the fund aims to empower investors to make a difference to the companies in which they invest on the micro level and society as a whole on the macro side.

“The differentiator here is that the fund will be gender-oriented and to be included in the investment, companies will have to demonstrate a firm commitment to and actual evidence of female representation in the workforce, from the shop floor right up to boardroom level. Whilst any right-minded member of UK society would and should be fully supportive of all efforts to increase gender equality and gender diversity, I am not clear on how this will work in practice.

“Across the globe we have seen the growing focus on ESG credentials for companies Exclusion; Evaluation and Engagement when applied to their business activities but is this really something new or just a fresh take on socially responsible investment i.e. companies working hard to make profit but not at the cost of the environment or their employees and customers and suppliers?”

He says it could represent a reworking of what many activist investors have already been doing.

Passive problems

McBreen is also worried that the fund could encourage investors into a passive fund for the wrong reasons.

“With the seemingly ‘crazy’ levels of certain stock markets around the globe including that of the UK, is sucking investors into passive funds for maybe the wrong reasons? Just because a new Index fund is launched with the highly laudable gender diversity qualities does not make it per se a compelling investment proposition.

“Time is needed to watch and evaluate if the new LGIM Girl fund can and does produce the goods in an increasingly volatile and challenging market and the fund will have to stand up to fierce competition and pressure to perform. When the returns are linked directly to indexes then this is not something that can be easily achieved, unless of course you believe that markets only ever go up.”



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