Morningstar Indexes emphasizing companies committed to gender equity and inclusion outperformed their broad market counterparts in the last year, representing a rare bright spot among indexes focused on environmental, social and governance (ESG) criteria.
The Morningstar Developed Markets Gender Diversity Index, which focuses on developed market companies that have strong gender diversity policies and practices, declined 16% in 2022 relative to a 17.8% decline for its parent index the Morningstar Developed Markets Large-Mid Cap Index. And as of February 27, the Index is up 4.5%, keeping pace with the 4.8% return for the parent.
In fact, in 2022 all but one of Morningstar’s gender-focused indexes outperformed their broad equity market equivalent.
Source: Morningstar Direct. Data as of Dec. 31, 2022.
What’s behind this outperformance? Morningstar Indexes experts cite below-market exposure to the technology sector, which tends not to score well on gender criteria, and above market exposure to energy and defensive sectors like healthcare and consumer defensive as major contributors over the past 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.”
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