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Gender Representation Progress Is Slow in C-Suite and Investment Management

A roundup of Morningstar research and commentary for International Women’s Day.


Here’s a spot of good news for International Women’s Day: Investing in women paid off in 2022, based on the performance of a range of Morningstar gender-diversity indexes. But wide gaps persisted between men and women, in employment in fund management, in corporate management, and elsewhere, according to research conducted for International Women’s Day by Morningstar analysts.

According to research by Morningstar Indexes, so-called gender-diversity indexes beat their broad-market equivalents during the year. In a down year for global equities, the Morningstar Developed Markets Gender Diversity Index fell 16% in 2022, versus a 17.8% decline for its parent, the Morningstar Developed Markets Large-Mid Cap Index. These indexes emphasize companies that demonstrate a commitment to gender inclusion and equity. They consider questions like: What’s the gender balance within the workforce, the executive ranks, and the board of directors? Is the pay gap between male and female employees disclosed and mitigated? Does the company offer parental leave and flexible work policies that encourage female participation and alleviate the burden of domestic responsibilities?

In fact, in 2022, all but one of Morningstar’s gender-focused indexes outperformed their broad equity market equivalent. And they posted strong five-year returns.

Table listing Morningstar gender diversity indexes

One key reason is a below-market exposure to technology, which has a lackluster score on gender criteria, coupled with above-market exposure to energy and defensive sectors like healthcare, says Dan Lefkovitz, strategist for Morningstar Indexes. You can read more commentary by Lefkovitz here. (And if you want to brush up on so-called gender-lens investing, read this.)

But enormous gaps between men and women remain.

In investment management, as Megan Pacholok and Amrutha Alladi point out, there hasn’t been a substantial shift in the number of female portfolio managers over the past decade. Only about 12.5% of portfolio managers across U.S.-domiciled funds were female in 2022, a similar proportion as a decade earlier. Yet women have been making their mark in portfolio management. Keep an eye out for stories by Pacholok and Alladi about the achievements of top women portfolio managers this week.

Among corporations, women’s progress in the C-suite has been scant, even as they made good progress in corporate boards. Female CEOs remain an extreme rarity: Just 6.3% of all S&P 500 constituents were led by a woman at the close of fiscal 2021, barely 2 percentage points higher than 10 years ago, according to Jackie Cook, stewardship director of Morningstar Sustainalytics. “For investors this will have repercussions, as over the longer term, better stock price performance and value-creation strategies are associated with greater female representation on boards and management teams,” Cook says. In the C-suite, women earned just 82 cents for every dollar earned by men.

Narrowing that divide will benefit investors, because it challenges groupthink, and inclusion is considered good management. “Diversity of thought is important,” says Hortense Bioy, global director of sustainability research for Morningstar. “And while we’re talking about gender because of International Women’s Day, the representation of diversity of thought extends to all kinds of diversity, racial diversity, neural diversity, and inclusion.”

Shareholders are playing a role to achieve change. Morningstar’s in-depth analysis of U.S. companies shows that in the 2022 proxy-voting year, the number of shareholder resolutions on issues affecting women in the workplace jumped 46% from 2021. “Companies that are conscientious on women’s inclusion are perceived as more likely to be well-run businesses,” says Lindsey Stewart, director of investment stewardship research on Morningstar’s global manager research team. Read the analysis by Morningstar analysts Mahi Roy and Rasa Kerelis here.

A number of Morningstar’s best companies—which have carved out wide Morningstar Economic Moat Ratings and made smart decisions with their capital—are led by women. Margaret Giles and Susan Dziubinski write about them here.

And of course, you can invest in companies with strong equal pay practices. Allie McCallion and Charity Blue give us some options here.

We’ll update this letter all week with new links below for research and commentary. Happy International Women’s Day!

The Percentage of Female Fund Managers Is Almost Exactly Where It Was 20 Years Ago

Where the industry has and hasn’t made progress on gender representation.

The Top Female Portfolio Managers to Invest With Now

Morningstar’s highest-rated female portfolio managers have shattered glass ceilings across asset classes.

Women Founders Get 2% of Venture Capital Funding in U.S.

Those paired with a male founder get 16.5%, PitchBook says.

Stacy Francis: On a Mission to Help Women Thrive

The financial advisor on whether women invest differently than men, how couples can find financial peace, and why widows often switch financial advisors.

5 Steps Women Can Take to Stave off a Retirement Shortfall

Use these questions to get started.

The Best Women-Led Companies to Own: 2023 Edition

These firms have carved out lasting competitive advantages and are led by female CEOs.

Shareholders Demand Accountability on Gender Equity. It’s Good Management.

Gender-related resolutions jumped 46% in the 2022 proxy season. Key themes were harassment and reproductive rights.

Why the Gender Pay Gap Remains Wide

Plus, some advice for women investors.

Women Make Progress on Corporate Boards, but C-Suite Gains Are Scant

Stocks perform better in the long term when their companies’ boards and management include more women.

3 Stocks That Stress Equal Pay

American Express, Citigroup, and Adobe are leading the charge in pay equity.

India: Women Fund Managers Are Drastically Underrepresented

Their performance is good, but the numbers are low.

10 Questions for BlackRock’s Wei Li

The chief investment strategist looks toward a turbulent 2023.

Bigger Is Not Better for This Boutique Fund Firm

Nicholas Investment Partners remains firmly focused on smaller stocks.

How to Be an Active Ally to Women in Financial Services

It’s one thing to call yourself an ally, and another to do the work.

Dear Fellow White Women in Finance: Hold That Door Open

Diversity improves our work and work environment.

The Tool Kit for Sponsoring Black Female Advisors

Having a mentor is good, but a sponsor can champion a career.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Leslie P. Norton

Editorial Director
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Leslie Norton is editorial director for sustainability at Morningstar.

Norton joined Morningstar in 2021 after a long career at Barron's Magazine and, where she managed the magazine's well-known Q&A feature and launched its sustainable investing coverage. Before that, she was Barron's Asia editor and mutual funds editor. While at Barron's, she won a SABEW "Best in Business" award for a series of stories investigating fraudulent Chinese equities, which protected the savings of investors and pensioners by warning about deceptive stocks before they crashed.

She holds a bachelor's degree from Yale College, where she majored in English, and a master's degree in journalism from Columbia University.

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