The Gender Lens of Women and Financial Investing

LeeAnn Sherman
LeeAnn Sherman

LeeAnn is a Chicago native that enjoys writing, designing, and Netflix binging. She aspires to create an enlightening environment wherever she goes – whether lounging at home, making a festive meal, entrenched in workforce culture, or even within a hand-crafted article. LeeAnn loves to learn, be creative, and express herself.

The end of 2020 revealed an astonishing unemployment rate of 30% for working women in the United States. This is largely attributed to the impact of COVID-19.

An interesting theme tied to greater representation among women in the workforce is Gender Lens Investing.

What is Gender Lens Investing

Gender Lens Investing is the process of identifying businesses, venture-capital companies, investment funds, or even emerging markets that support gender diversification for improved decision making. This analysis does not reflect the need to limit men by promoting women. Rather it represents how decisions are being determined within a given space with the aim of diversifying access to capital for both genders in a more equitable manner.

An excellent example that’s been offered by Jackie VenderBrug, Managing Director, Head of Sustainable and Impact Investing Strategy for Merrill and Bank of America Private Bank involves software that has historically been designed for male psychological problem-solving patterns. Here, the software may have increased its total offerings, which would have supported a more successful decision-making process during the development stages.

The Specter of Financial Performance

Let’s look at financial performance as another example of how the gender lens investing process helps with overall decision-making. The psychology behind female investing can be slightly different than male investing. In this case, females tend to invest with less risk, but are more likely to buy and hold for extended periods.

Alternatively, men are more likely to buy investments with reactions to market fluctuations leaving them more likely to sell their assets sooner. These nuances become critical when considering an investment fund with the proper balance of gender input.

Why Analyze the Gender Diversity of Investments? 

Women still hold only 28% of management-level positions, with 19% at the c-suite level, yet they represent 50% of the world’s population. The disparity in these figures supports the original example of how software was designed through the primary lens of male psychological problem-solving patterns.

These marginal positions held within the workforce also represent an 8.3% financial gap between men and women. Therefore, the gender imbalance has several setbacks from the examples provided. These are critical aspects to future generations, the development of our female leaders, and our decision-making processes.

Narrowing the Gender Gap

When women thrive, so do our businesses, communities, and societies. In 2015, the McKinsey Global Institute predicted that if the economic gender gap had been narrowed the world’s GDP would have grown by $12TR by 2025. One of the reasons for this is that women reinvest their incomes back into their families and communities – promoting economic growth.

Alternatively, as stated by McKinsey Global Institute (2015), if the economic gender gap had narrowed further by 2025, then $28TR of that gap would have been eliminated. Considering this, the Woman in the Workforce 2020 McKinsey and Company Report stated that working mothers, senior-level women, and black women are reported to be 10% more exhausted than their male counterparts. 

Thankfully, some companies are leading gender equity within the workforce. Some of these companies are Ulta Beauty, Best Buy, and General Motors. Promoting this form of equitable representation will help women gain access to more senior-level positions, board of director seats, and access to more capital.

When that happens, we will see a larger GDP, access to more capital for investing within women-led companies, the narrowing of the gender pay equity gap, and greater inclusively using talent within industries that lead to better opportunities.

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