How we score mutual funds
To power Gender Equality Funds, we combine two detailed data sources: company gender equality data from Equileap, and mutual fund financial data from Morningstar.
Equileap is a social venture that aims to accelerate progress towards gender equality in the workplace as a vital lever in reducing poverty and inequality. Equileap tackles its mission by collecting and checking data, carrying out research, and ranking and rating companies on their gender equality performance. It supports investors to deploy their capital with a gender lens, companies to improve their performance, and policy makers to bring in effective frameworks to increase gender equality at work.
Equileap Gender Scorecard
Equileap has created a unique database that collects data about publicly listed companies on their gender balance and their commitment to gender equity. The database was created by collecting publicly available information as reported by the companies themselves in their most recent company reports, filings and other reports.
To assess a company’s commitment to gender equality, Equileap has developed the Equileap Gender Scorecard, inspired by the UN’s Women’s Empowerment Principles. The Scorecard allows Equileap to collect information methodically about the companies in its database, based on a set of pre-identified criteria. The methodology has been peer reviewed by experts in finance, business, economics, and gender. The Scorecard is featured in the 2018 edition of Equileap's Gender Equality Global Report and Ranking.
Every company in the data sample was sent a questionnaire inviting them to send their data. The Equileap Ranking skews towards companies that are more transparent and make their data publicly available. Equileap encourages companies to submit information to them, as the database is continuously updated as new research and data is made available.
Scorecard criteria for companies
Gender Equality Funds uses the primary criteria from the Equileap Gender Scorecard, covering two categories that measure a) gender balance in the overall leadership, management and workforce of a company, and b) policies promoting gender equality.
For each gender lens criteria a question has been defined, and a data point has been identified to answer the question. Lastly, a score and weighting has been allocated to the individual question to reflect the judgement that some criteria may be more important for furthering gender equality than others.
For the Gender Balance in Leadership and Workforce category, companies can earn a max of 15 points based on the following criteria:
- Board of Directors - Gender balance of the company’s board of directors/non-executive board (or supervisory board)
- Executives — Gender balance of the company’s executives / executive board
- Senior Management — Gender balance of the company’s senior management
- Workforce — Gender balance of the company’s total employee workforce
- Promotion and Career Development Opportunities — Ratio of each gender in senior management compared to ratio of each gender in the workforce
For the Policies Promoting Gender Equality category, companies can earn a max of 7 points based on the following criteria:
- Fair Remuneration — Commitment to pay a fair wage to all employees, even in those countries that do not legally require a minimum
- Training and Career Development — Commitment to ensure equal access to training and career development to both men and women, at all levels of the company
- Recruitment Strategy — Commitment to ensure non-discrimination against any type of demographic group including women
- Safety at Work — Commitment to the safety of employees in the workplace, in travel to and from the workplace and on company related business, and ensure the safety of vendors in the workplace
- Human Rights — Commitment to ensure the protection of human rights, including employees’ rights to participate in legal, civic and political affairs
- Social Supply Chain — Commitment to reduce social risks in its supply chain such as forbid business related activities that condone, support, or otherwise participate in trafficking, including for labour or sexual exploitation
- Employee Protection — Systems and policies for the reporting of internal ethical compliance complaints without retaliation or retribution, such as access to confidential third-party ethics hotlines or systems for confidential written complaints
As part of As You Sow's Invest Your Values program, we've built a series of sites analyzing mutual fund holdings on environmental and social issues like climate change, deforestation, tobacco, and weapon investments.
To power these sites, we source financial data on mutual funds and equities from Morningstar. This dataset covers global equities and thousands of U.S. open end mutual funds, as well as ETFs. It allows us to take research about what companies are doing, and create methodologies that aim to describe how funds are exposed to different types of corporate misbehavior, and possibly investment risk.
Using company gender equality data to score fund portfolios
To calculate gender equality scores for mutual funds, we start with the Equileap company scores, and cross-referenced them with the holdings in each mutual fund. For each holding in a fund's portfolio that is covered by the Equileap Gender Scorecard, we average the company-level scores to find an overall score for the fund.
When averaging, we weight the scores by the market value of the holding. This means if a fund has more money invested in one holding compared to another, the Equileap score of the holding with more assets invested counts more towards the fund’s overall average. Finally, this weighted average is normalized, or rescaled, to 0-100.
The companies analyzed by Equileap cover over 90% of the total investments of the funds we scored. Not every holding is scored, but for most funds, a large percentage of their holdings have been scored by Equileap.
Each of the funds we analyzed is based in the U.S., offered as an open-end mutual fund or ETF, is at least 40% invested in direct stock holdings, and has at least 33% Equileap coverage – that is, at least 33% of the holdings are stocks issued by companies that were scored by Equileap.
Currently, our analysis is focused on stock investments – we don’t score bond funds, or other non-stock-based funds.
Ranking fund gender equality scores
For a fund to earn a score of 100 out of 100 points, it would have to only invest in companies that earn the best score from Equileap, a 22 out of 22.
The problem is, currently, there are ZERO companies that earn Equileap’s best score. That means earning 100 points is unattainable, until companies shift.
To give a relative sense of whether a fund is doing better or worse than other funds, in addition to the gender equality score, we also rank the fund. Each fund is ranked against the entire dataset of 5,000+ funds, and each fund is also ranked against a smaller group of funds that share the same investment category label applied by Morningstar.
The overall and peer rankings are presented as percentile rankings. If a fund earns an overall ranking of 50, that can be read as: "This fund ranked better than 50% of all other funds in the dataset." If a fund earns a peer ranking of 75, that can be read as: "This fund ranked better than 75% of the other funds in the same investment category."
Sub-scores and ranks: Gender Balance and Gender Policies
We also calculate two sub-scores for each fund. For the two categories making up the Equileap Gender Scorecard primary criteria – gender balance, and gender policies – we apply the same process of averaging the company scores, weighted by market value, and normalized 0-100.
For each sub-score, we also rank each fund against the overall dataset, and the funds in its investment category, same as we do for the overall gender equality score.
This breakdown can help show if the companies inside a fund portfolio are leading or lagging on the gender balance criteria vs. the criteria measuring policies promoting gender equality.
Top and bottom-scored holdings
We list the top 10 holdings in each portfolio with the best scores on the Equileap Gender Scorecard, as well as the bottom 10 holdings with the worst scores.
These lists represent the holdings that are having the biggest effect, both positive and negative, on the fund's overall gender equality score.
In the case of ties, for both lists, the holding with more assets invested is listed higher. For example, if two holdings both earned zero points on the Equileap scorecard, the holding that had more money invested by the fund would be listed higher on the list of 10 worst-scoring holdings.
Financial returns and benchmark comparisons
Comparing to a benchmark is a common way of measuring a fund's performance. You can compare each fund to a benchmark suggested by Morningstar, or choose from a set of common indexes. See whether the fund had better or worse returns than the benchmark, and whether it had better or worse gender equality scores.
We track socially responsible funds
We use Morningstar's "sustainable mandate" indicator to determine which funds to tag as socially responsible. Socially responsible funds may make investment decisions based on issues like environmental responsibility, human rights, or religious views. A socially responsible fund may take a proactive stance by selectively investing in, for example, environmentally-friendly companies or firms with good employee relations. They may also avoid investing in companies involved in promoting alcohol, tobacco, or firearms, or in the defense industry. Look for this symbol to find funds that are designated socially responsible.
The Forum for Sustainable and Responsible Investment (US-SIF) is a group advancing sustainable, responsible, and impact investing. Asset managers who are members of US-SIF often have policies to consider the diversity and equal employment opportunity policies and practices of the companies they invest in. Look for this symbol to find funds that are members of US-SIF.
Searching for alternate investments
Use our search page to sort and filter our database and find the information you need. We track thousands of the most commonly-owned mutual funds in the U.S., across hundreds of fund families and dozens of investment categories.
We'll show you at-a-glance how the fund scores, how it ranks, and whether it has a socially responsible investing mandate. For each result, you can click through to see the full set of scores and ranks.
Gender-lens investing action toolkit
When you've looked up funds and found the data you need, what's next? You can learn how to make a change and move your money with our gender-lens investing action toolkit. Whether you’re an individual investor or if your investments are in your employer-sponsored plan at work, our step-by-step toolkit can help. There's an in-depth guide to responsible investing, links to external resources, a sample letter to send to your employer 401(k) manager, and more — everything you need to make a change and get started with gender-lens investing.