Morningstar Indices, emphasising companies committed to gender equity and inclusion, beat their broad market equivalents in the previous year, a rare bright spot among indexes focused on environmental, social, and governance (ESG) criteria.
The Morningstar Developed Markets Gender Diversity Index, which focuses on companies in developed markets with excellent gender diversity policies and practises, fell 16% in 2022, compared to a 17.8% drop in its parent index, the Morningstar Developed Markets Large-Mid Cap Index. And, as of February 27, the Index was up 4.5%, keeping pace with the parent’s 4.8% return.
In 2022, all but one of Morningstar’s gender-focused indexes beat their broad equity market equivalent.
Source: Morningstar Direct. Data as of Dec. 31, 2022.
What’s behind this outperformance? Morningstar Indexes experts highlight below-market exposure to the technology sector, which does not do well on gender criteria, and above-market exposure to energy and defensive sectors such as healthcare and consumer defence as significant contributors over the last year.
Amelia Furr, Global Head of Sales, Morningstar Indexes:
“Our ESG indexes are as diverse as the ESG landscape itself, and performance across our ESG suite will vary based on broad market cycles. In the case of our gender diversity indexes, in addition to offering investors the ability to gain exposure to companies that demonstrate strong diversity practices, index performance has been quite strong.”
Diana Van Maasdijk, Co-Founder and Executive Director, Equileap:
“Equileap’s data and gender equality rating methodology helps develop transparent and rigorous market benchmarks that measure and accelerate progress toward gender equality in the workplace. Our Gender Equality Scorecard, which is embedded in the methodology for Morningstar gender diversity indexes, spans 19 criteria including gender balance, gender pay gap, paid parental leave and anti-sexual harassment policies.”