Sustainable Investing Perspectives: Investing with a gender-lens

Hi everyone, Brian Contreras here. Welcome back to the Sustainable Investing Perspectives podcast series on the UBS Conversations podcast channel. We are joined here today by Preeti Sayana, a Portfolio Manager at Fidelity Investments, and Tiffany Agard of CIO Investment Management.

In this episode, we'll discuss investing with a gender lens. Statistics from the 2026 Gender Lens Investment Report from UBS Global Investment Management shows women hold 30% of U.S. company board seats and make up 29% of C-suite executives, yet only 1.3% of VC funding in the U.S. and Europe went to companies founded by all women. While we are seeing advances in this space, there are still opportunities to advance gender equality and leveraging your investments can be one way to do that.

Tiffany, I think some people hear gender lens investing and are interested in it, but they don't really know what it is or how it works. Can you break down what gender lens investing is and how investors can begin to think about building a portfolio around it? Great.

Thank you, Brian. I think that's a perfect place to start. One of the reasons why we wrote the report that you mentioned earlier was really to help demystify that process.

So when we talk about gender lens investing, often people think about it as one idea, but in reality, it includes a range of objectives, instruments, assumptions, and ultimately it's a set of investment choices made with the intention to empower women and close the gender gap in a variety of different areas. So this could be advancing gender equality in the workplace, narrowing the gender wealth gap, supporting solutions to women-focused problems, whether it's health-related or otherwise. And we often think about this as an overlapping web of investing in women.

So a thing around women leaders and women in spaces of leadership, investing by women. So thinking about those who are making investment decisions, leading investment strategies, and then also investing for women. So thinking around more of a solutions-oriented approach to solving problems that either directly impact women or tend to affect women more.

And so because you have all of these different ways to think about gender lens investing and how you can sort of approach this problem, it's really helpful to start with the why. And that's where we often guide investors, is thinking around what is it that you want to achieve with your capital? What is it that you want to achieve with your strategy?

Why is it that you're pursuing this approach? Because that's also going to help shape the different opportunities and tools and strategies that you end up using. We often like to think about it as if you're wanting to work out for the new year and you want to focus on building muscle, maybe your approach then is going to be more increasing your protein intake and lifting weights rather than cardio.

So really thinking around what are the outcomes, what do you want to achieve? And then that will help you sort of drive your different investment approach. And we can think about that sort of across different asset classes.

So if we want to think around fixed income, there's a lot of opportunities to think through expressing sustainability directly through the use of proceeds. So you have bonds that may be going towards increasing healthcare access to affordable housing, to different types of facilities and infrastructure. And then you may have equity strategies where you are investing in companies that have really strong workforce management policies and have a really robust cadre of women in board seats and sort of in that C-suite space.

So you can really look at it from a wide range of opportunities across different asset classes, but it's really helpful to start with what is the intent with this, and then that can help guide future decisions. I think that's a perfect segue to Preeti who runs a gender-focused strategy at Fidelity. Preeti, tell us how you framed the investment case for gender diversity.

Thank you, Brian, and thank you for the opportunity. And before we start, a quick reminder that Fidelity does not have a house view. The case for gender investing is quite strong.

Our data shows that companies with strong board and executive gender representation with aligned policies have actually generated excess annualized returns of over 1.2% a year. So there is a financial case for it. Gender lens investing is actually trying to capitalize on this opportunity for our performance by giving women compensation on par with male peers and providing support for working moms with policies that are parentally flexible working environments, etc.

Also, we should keep in mind that women are a growing class of investors we cannot afford to ignore with trillions of assets in their control. So supportive gender policies are a creative to a company's long-term growth potential. That's really interesting, Preeti, particularly as you're thinking around and talking about the research that shows the performance of certain companies that are really investing and really thoughtful around this space and around gender representation.

As you're thinking about different strategies that focus on gender, could you help us understand what the data looks like as you're creating an investable universe and how that data has evolved over the past few years? Yeah, thank you. The data is actually very, very in-depth, extremely detailed, and our access to data is unparalleled, and we get it from a multitude of sources.

Thus far, we have seen no change in data availability, and I'm super optimistic this gets only better with technology. I've been at Fidelity for a long time and an analyst for a number of years, and I've always had access to so much data. But when I started in this role as portfolio manager of the Women's Fund, the range and granularity of the data was quite stunning to me.

Our ESG model goes so deep, which gives us an incredible edge in this arena. So I'm pretty excited to see what we can do with data, with not just what we have, but what's coming in the pipeline. Preeti, to follow the point on data, with a gender strategy that prioritizes women in leadership, what does the data show you about what type of companies tend to make it into your investable universe?

Are there certain regions or sectors that show up more than others? Yeah, we look at a few criteria when we create our screens. We primarily focus on three key pillars.

Women representation in senior management or the C-suite, followed by board representation and a host of other policies which support women in the workforce. And this can range from parental leave to pay equality, etc. So this is the primary three pillars we start on for companies that make it through our diversity screens.

Moving on to when we look at sectors or regions, the sector tilts are pretty much a result of bottom up stock picking. It's stock by stock and it's not really a top down approach. Many sectors screen very favorably, actually, for women, for gender lens investing, especially sectors such as industrials, health care and technology, while other sectors such as the materials or commodities or energy are harder.

But this is also changing. I've been very pleasantly surprised by some of the companies I've been able to find even in these sectors. In terms of region, I can go outside the US and I've spent a large part of my career focused on international stocks, so I actively cost a really wide net and look for names I find fundamentally interesting once they meet the gender criteria.

But the bar to go outside the US is quite high. The US has been an exceptionally strong market for a very long time and there are ample opportunities, opportunities domestically. So I don't see the need to, but I do go and look at opportunities outside the US where I find exceptional alpha to be made.

And when I do the deep dive in some sectors, especially with those which score poorly, like, you know, on diversity, like, for example, mining as a sector, I have looked more broadly at the fundamentals of driving the stocks tend to be common as their commodity prices, global commodity prices. So looking internationally has helped me in this regard to find some really good opportunities that fit the diversity and fundamental criteria as well. So that's really interesting just thinking around where the opportunities are in different sectors and also how that's changing.

How do you how do you balance managing an investable universe focused on gender inclusion and workforce management with other investment considerations? Well, the core of the job is fundamentally is delivering strong results for my shareholders. Fundamental bottoms of analysis is the core of the process.

So once the stocks pass the diversity screen, I spend the bulk of my time focusing on the fundamentals. I look for companies with strong, defendable growth, healthy balance sheets, good cash flow generation by trading, trading at attractive valuations. So I tend to be overweight sectors which screen very well on diversity, along with strong growth tailwinds such as technology and health care.

I am benchmark aware, but the bets are bottom up driven, leveraging our fidelity research. That said, portfolio construction is a key part of the process to see how the fund looks top down, to gauge how the bottom up stock picking looks at the portfolio level for unintended bets, to manage risk and to acknowledge my factor exposures. I am seeing very interesting opportunities driven by AI, which is showing up not just in technology, but also in sectors such as industrial, energy and even utilities.

These sectors are big beneficiaries of AI CapEx spend, along with signs of reshoring that we are seeing in the US. Health care is another sector which I'm overweight and very excited about as this is emerging from a prolonged adjustment phase following strong COVID era gains and subsequent derating of the sector as growth lagged with inventory issues, supply chain issues, tariffs and regulatory concerns. So the life cycle tools industry is now emerging from this kind of de-stocking hangover and headwinds now appear to be easing.

So I'm pretty excited about the opportunities that are in health care, too. That's really interesting. I mean, it sounds like there's really a lot of opportunity across the board, and I think it's really interesting how you're also able to pair it with this broader theme of AI that we're seeing and even, you know, sort of beyond the hyperscalers, but just sort of thinking around this broader AI systems trend.

So that's really helpful to think through where you can have these overlaps between, you know, the approach to the strategy, as well as some of these larger secular themes that we're seeing. Tiffany, I want to bring it back to you. We've dabbled into what one strategy might look like within this gender lens investing space.

How do you think about the broader set of investment opportunities, particularly in the public markets? Yeah, that's a great question. And I was, you know, was really excited to have Preeti on to delve into, you know, what a specific strategy could look like.

And so, you know, it's helpful to also take a step back and think through what does this broader universe look like? And so when we're thinking around specifically these gender and social lens investment strategies, where you have the fund thinking about women in leadership or broader workforce management, you know, the opportunity set is there, but still relatively limited. So we're always very mindful for when we see, you know, really strong opportunities in this space.

If we look at Morningstar data, our research found almost 90 strategies in this space, about two thirds of them in equity, one third in fixed income. And then across that almost, you know, three quarters of them in Europe, interestingly enough, and then sort of the majority in the U.S. and Canada. And so even when we're thinking around where these, you know, where these strategies are domiciled, right, that also sort of lends a little bit of thinking as to where some of these regional tilts might be, sort of similar to the comments other P2s making around just the wealth of opportunities, particularly in the U.S.

And then even when we delve deeper in looking at these different strategies, we see variations across region and sector on policy availability, whether it's related to training opportunities, anti-harassment laws, flexible location policies. So all these different things really inform what goes into these strategies. And so that makes us really mindful around what are the different sector and regional tilts that that are available that make up these strategies, it's going to be really important for investors to be mindful of as they're building a portfolio across some of these strategies.

And to close us out, Tiffany, what do you think equity investors in the public markets could better understand when they think about investing with a gender lens? That's a great question to end on, Brian, I would say three things. One, it's not a one size fits all approach.

So as I mentioned before, there's a lot of different ways to think around this gender lens investing space. And it's really important to think through what is it that you want to do with your capital? And the more that you understand your motivations, that will drive sort of this starting point for the different opportunities that you can use to build that portfolio.

Two, as you're looking through investable opportunities, the investable universe, it's also helpful to understand where are the opportunities and limits. So where do you have more availability of strategies and more choice? Where are you more mindful of the sector tilts and regional tilts, right?

So you're making sure that you're continuing to build this diversified portfolio while taking this gender lens approach. And that might also involve pairing it with different types of strategies. And then three, I would just say really understanding the role and opportunity that active management plays in this space.

So as we're thinking around data and how do we parse through all of the information that's available to really help us get to the outcomes that we're looking for, that is where there's an opportunity for active management to add value in leveraging the data to help make informed decisions, as well as be mindful around how can funds achieve their focus outcomes and also manage tilts and biases for performance as well. Well, thank you, Preeti and Tiffany, for spending some time with our listeners and clients on the Sustainable Investing Perspectives podcast. And I look forward to our next conversation.

Great. Thanks, Brian. Thank you.

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