“Women-led companies perform 3x better than S&P 500”

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Locked
Badger1754
Posts: 98
Joined: Thu Jan 25, 2018 2:00 pm
Location: Upstate NY

“Women-led companies perform 3x better than S&P 500”

Post by Badger1754 » Sun Apr 08, 2018 1:14 pm

DW (a very opinionated feminist) got very excited about this article and is pitching me to follow it as an investment strategy.

Aside from the fact that this is active management (aka Boglehead anathema), I just don’t see it.

There are two funds out there, PXWEX and GWILX, that claim to invest in companies with women in positions of leadership. Aside from an insane expense ratio (90-100 bps), they are getting slaughtered by VOO.

PXWEX here.

GWILX here — not really being slaughtered by VOO, but its only been around since 2016 and is tracking the VOO.. except it has 100 bps expense ratio.

What’s going on here? Wishful thinking? Badly designed backtesting algorithm? Expenses wiping out any gains? Survivorship bias?

daveydoo
Posts: 1349
Joined: Sun May 15, 2016 1:53 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by daveydoo » Sun Apr 08, 2018 1:25 pm

I suspect that it depends more on the industries than the women. Suspect that commodities (meaning "extractive" industries) are underrepresented and that tech is over-represented.

Also, there is a big difference between female CEO and "10% of leadership positions occupied by women." Hard to believe that there are even any large companies around that don't meet the latter criterion.

I've been reading Thinking Fast and Slow, by the Nobel Prize-winning economist (well, psychologist -- same thing) Daniel Kahneman, and the contribution of CEO to company performance seems modest at best.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

deltaneutral83
Posts: 801
Joined: Tue Mar 07, 2017 4:25 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by deltaneutral83 » Sun Apr 08, 2018 1:26 pm

On one of the bio's on Buffet he talked about luck and how he was born to the right people in the right country at the right time, and was the right gender. He mentioned something to the effect of this country now exposing itself to 51% more of the population for leaders and innovators and that was one of the reasons he was extremely bullish on the US moving forward.

BogleBoogie
Posts: 564
Joined: Tue May 13, 2014 11:15 am
Location: AK

Re: “Women-led companies perform 3x better than S&P 500”

Post by BogleBoogie » Sun Apr 08, 2018 1:29 pm

What does "DW" stand for?

User avatar
JoMoney
Posts: 5353
Joined: Tue Jul 23, 2013 5:31 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by JoMoney » Sun Apr 08, 2018 1:33 pm

How'a'bout this [chart link]... $10,000 invested in the "Russell 1000 Equal Weighted" in 2002 would have grown to $35,730.23 by the end of 2014
Whereas $10,000 invested in the S&P500 Price Return index (ignoring dividends) only grew to $17,933.39
That lousy $7,900 made on the S&P is less than 3x the $25,700 made on my alternate index.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

User avatar
arcticpineapplecorp.
Posts: 3026
Joined: Tue Mar 06, 2012 9:22 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by arcticpineapplecorp. » Sun Apr 08, 2018 1:35 pm

BogleBoogie wrote:
Sun Apr 08, 2018 1:29 pm
What does "DW" stand for?
"dear wife" or apparently "darling wife":

https://www.google.com/search?q=what+do ... fox-b-1-ab
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

hilink73
Posts: 274
Joined: Tue Sep 20, 2016 3:29 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by hilink73 » Sun Apr 08, 2018 1:43 pm

Badger1754 wrote:
Sun Apr 08, 2018 1:14 pm
DW (a very opinionated feminist) got very excited about this article and is pitching me to follow it as an investment strategy.

Aside from the fact that this is active management (aka Boglehead anathema), I just don’t see it.

There are two funds out there, PXWEX and GWILX, that claim to invest in companies with women in positions of leadership. Aside from an insane expense ratio (90-100 bps), they are getting slaughtered by VOO.

PXWEX here.

GWILX here — not really being slaughtered by VOO, but its only been around since 2016 and is tracking the VOO.. except it has 100 bps expense ratio.

What’s going on here? Wishful thinking? Badly designed backtesting algorithm? Expenses wiping out any gains? Survivorship bias?
As long as it's better than those hurtful years at Hewlett Packard. "(New) rules of the garage" and such. Shame.

User avatar
arcticpineapplecorp.
Posts: 3026
Joined: Tue Mar 06, 2012 9:22 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by arcticpineapplecorp. » Sun Apr 08, 2018 1:46 pm

There's also this from the article:
Of course, not every woman CEO had a stellar performance. The biggest loser on the list was Janet Robinson at The New York Times, where an investor would have lost more than 80% of his or her investment during her tenure from Dec. 27, 2004 to Jan. 3, 2012. Others in the negative were Mary Sammons at Rite Aid, Kerrii Anderson at Wendy’s International, and Patricia Russo at Lucent.
I foresee a few problems with this line of thinking:

1. I think if you're going to invest just based on the gender you're adding an additional risk because you're undiversifying from a leadership perspective. Just as some female CEOs did poorly (example from quote above), you're eliminating the male CEOs who did well. I suppose this would be a type of "manager risk" that you take when you pick individual stocks rather than owing the market.

2. I know this might be a minority situation, but how does one invest in this fashion with the gender fluidity going on. I.E., If Caitlin Jenner became a CEO I assume that would be one company that would be consider female-led, but some might argue this point. Would they have a point? Maybe, maybe not. I have no answer, I'm just suggesting even our definitions of "Women-led" or "Male-led" are being called into question. Caitlin identifies as a woman so that should be the end of discussion. But I doubt it would be.

You may think this is silly, but go and listen to the podcast Start Up, specifically the one called "Start Up Bus". It features people who are engaged in a contest to dream, develop and market a product/company, etc. to venture capitalists. One of the people involved refused to be referred to as either "He" or "She" and instead requested to be referred to as "They". I assume you'd have to screen out a "They-led" company, because it's not a "Woman-led" company, or would you?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

User avatar
Pajamas
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by Pajamas » Sun Apr 08, 2018 1:50 pm

BogleBoogie wrote:
Sun Apr 08, 2018 1:29 pm
What does "DW" stand for?
"Dear Wife"

Mostly seems to be used by older men and without irony even when discussing feminism.

Badger1754
Posts: 98
Joined: Thu Jan 25, 2018 2:00 pm
Location: Upstate NY

Re: “Women-led companies perform 3x better than S&P 500”

Post by Badger1754 » Sun Apr 08, 2018 1:57 pm

Pajamas wrote:
Sun Apr 08, 2018 1:50 pm
"Dear Wife"

Mostly seems to be used by older men and without irony even when discussing feminism.
Meh. She once referred to me on another forum as CH “Chubby Hubby”.

User avatar
dm200
Posts: 17087
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: “Women-led companies perform 3x better than S&P 500”

Post by dm200 » Sun Apr 08, 2018 2:00 pm

I wonder if such a report or study said that instead of being 3x, it was x/3?

Dottie57
Posts: 3901
Joined: Thu May 19, 2016 5:43 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by Dottie57 » Sun Apr 08, 2018 2:04 pm

Pajamas wrote:
Sun Apr 08, 2018 1:50 pm
BogleBoogie wrote:
Sun Apr 08, 2018 1:29 pm
What does "DW" stand for?
"Dear Wife"

Mostly seems to be used by older men and without irony even when discussing feminism.
I think it is quite nice. And I am a feminist (61 yo)

keith6014
Posts: 183
Joined: Thu Jan 02, 2014 11:58 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by keith6014 » Sun Apr 08, 2018 2:20 pm

arcticpineapplecorp. wrote:
Sun Apr 08, 2018 1:35 pm
BogleBoogie wrote:
Sun Apr 08, 2018 1:29 pm
What does "DW" stand for?
"dear wife" or apparently "darling wife":

https://www.google.com/search?q=what+do ... fox-b-1-ab
i thought it meant "dark wing" https://en.wikipedia.org/wiki/Darkwing_Duck

User avatar
nisiprius
Advisory Board
Posts: 36151
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: “Women-led companies perform 3x better than S&P 500”

Post by nisiprius » Sun Apr 08, 2018 2:28 pm

Let me think... Ginni Rometty, CEO of IBM since 2012; blue line, Vanguard 500 Index Fund; orange line, IBM total return including dividends.
Image

Mary Barra, CEO of General Motors since 2014;
Image

Carly Fiorinia CEO of Hewlett-Packard 1999-2004.
Image

It ain't that simple, folks.

Now, who can say whether any man would have done better? But these certainly are counterexamples to the simple statement that "women-led companies perform three times better than the S&P 500."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

golfCaddy
Posts: 642
Joined: Wed Jan 10, 2018 10:02 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by golfCaddy » Sun Apr 08, 2018 2:32 pm

Why is 2002 the starting point?

User avatar
JoMoney
Posts: 5353
Joined: Tue Jul 23, 2013 5:31 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by JoMoney » Sun Apr 08, 2018 2:34 pm

I'm wondering what the implication is supposed to be from the methodology... I mean, it's not really talking about the Women-led companies increasing sales/revenues or efficiencies...
Is it suggesting that the stock market is over-pricing companies led by women and leading to a bubble ? :P
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

TTBG
Posts: 95
Joined: Sun Nov 09, 2014 8:16 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by TTBG » Sun Apr 08, 2018 2:43 pm

Pajamas wrote:
"Dear Wife"
Mostly seems to be used by older men and without irony even when discussing feminism.
I haven't noticed that. I've always thought it was pretty standard bogleheads terminology, along with DH (dear husband), DD (dear daughter) and DS (dear son).

User avatar
permport
Posts: 42
Joined: Sat Mar 31, 2018 11:20 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by permport » Sun Apr 08, 2018 2:52 pm

Whether or not women make better managers/entrepreneurs is such a contentious topic. It's not something I personally would ever want to be discussing around the dinner table or anything of the sort.

When it comes to investing, though, I don't buy into the idea that investing in only women-lead companies is somehow going to lead to excess risk-adjusted returns. For even if it does, the opportunity will not last long. Not something worth pursuing IMHO.
Buy right and hold tight.

david1082b
Posts: 364
Joined: Fri Jun 09, 2017 12:35 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by david1082b » Sun Apr 08, 2018 2:53 pm

Badger1754 wrote:
Sun Apr 08, 2018 1:14 pm
DW (a very opinionated feminist) got very excited about this article and is pitching me to follow it as an investment strategy.

Aside from the fact that this is active management (aka Boglehead anathema), I just don’t see it.

There are two funds out there, PXWEX and GWILX, that claim to invest in companies with women in positions of leadership. Aside from an insane expense ratio (90-100 bps), they are getting slaughtered by VOO.

PXWEX here.
What’s going on here? Wishful thinking? Badly designed backtesting algorithm? Expenses wiping out any gains? Survivorship bias?
PXWEX is a global fund so S&P 500 is not an appropriate benchmark I think; VT and ACWI are more appropriate as benchmark funds. To add to the issues, M* says "This fund experienced a significant change in its investment strategy and/or legal structure as of 05/31/2010. Details regarding significant restructures can be found in this methodology paper" What does that mean? Did it not follow the current strategy before then?

Starting from May 31st 2010, we can see that PXWEX has slightly underperformed VT and ACWI: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

M* says the portfolio is 31% non-US stock, so it is still biased to US more than global market weight: http://portfolios.morningstar.com/fund/summary?t=PXWEX

blinx77
Posts: 227
Joined: Sat Jan 07, 2012 11:23 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by blinx77 » Sun Apr 08, 2018 2:57 pm

Pajamas wrote:
Sun Apr 08, 2018 1:50 pm
BogleBoogie wrote:
Sun Apr 08, 2018 1:29 pm
What does "DW" stand for?
"Dear Wife"

Mostly seems to be used by older men and without irony even when discussing feminism.
Yes. As is DH (dear husband), DD (dear daughter) and DS (dear son). Standard internet forum language used by people of all backgrounds and ages, on all sorts of websites, liberal, conservative, feminist, whatever. No need to specifically call out "older men" and imply bad behavior for this universally accepted term.

Maybe older men are not the only ones that need to check their prejudices. :annoyed

jminv
Posts: 458
Joined: Tue Jan 02, 2018 10:58 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by jminv » Sun Apr 08, 2018 2:58 pm

First off, they are using the wrong index to make comparisons. I immediately noticed this. The S&P 500 is the wrong benchmark for the Fortune 1000 or the (small) subset of companies the female CEOs in this article represent. The author has noted the first issue (Fortune 1000 benchmark issue) and responded with her own benchmark construct which no longer showed the kind of outperformance initially claimed. She then tried some other things to show the outperformance again with her constructed benchmark (claims she can't use a fortune 1000 equivalent index because she can't afford it). She never addressed the second issue, in that the benchmark is not properly correlated to the industry composition that these CEOs inhabit. This is probably where the perceived outperformance comes from and if it were corrected for, the results would likely show equivalent outcomes between male and female ceos in the sectors (which seem to be over-represented by tech). You can show all kinds of outperformance if you deliberately pick the wrong benchmark to compare to. Active managers tend to do this as do authors trying to sell other investing/ETF 'ideas' like I assume this author is.

In 2017, the number of Fortune 1000 female CEOs was at an all time high of...32. In 2016 that number was 21. During the period of 02-14 investigated by the author it was even smaller. The outperformance, as the author acknowledges, is based on a just a few of these companies. It seems like the issue with this strategy as reported by the author is a strong outlier effect in a very small sample size plus deliberately using the incorrect benchmark to compare results.
Last edited by jminv on Sun Apr 08, 2018 3:04 pm, edited 5 times in total.

Nate79
Posts: 2977
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: “Women-led companies perform 3x better than S&P 500”

Post by Nate79 » Sun Apr 08, 2018 3:00 pm

I'm considering starting a fund that only tracks environmentally friendly companies that do not manufacture guns led by women CEOs. I'm going to charge 2% ER.

Badger1754
Posts: 98
Joined: Thu Jan 25, 2018 2:00 pm
Location: Upstate NY

Re: “Women-led companies perform 3x better than S&P 500”

Post by Badger1754 » Sun Apr 08, 2018 3:03 pm

Nate79 wrote:
Sun Apr 08, 2018 3:00 pm
I'm considering starting a fund that only tracks environmentally friendly companies that do not manufacture guns led by women CEOs. I'm going to charge 2% ER.
“Learn the customer's weaknesses, so that you can better take advantage of him.”
— Ferengi Rule of Acquisition #87

User avatar
Pajamas
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by Pajamas » Sun Apr 08, 2018 3:07 pm

TTBG wrote:
Sun Apr 08, 2018 2:43 pm
Pajamas wrote:
"Dear Wife"
Mostly seems to be used by older men and without irony even when discussing feminism.
I haven't noticed that. I've always thought it was pretty standard bogleheads terminology, along with DH (dear husband), DD (dear daughter) and DS (dear son).
What I said and what you said are not contradictory.
blinx77 wrote:
Sun Apr 08, 2018 2:57 pm
Yes. As is DH (dear husband), DD (dear daughter) and DS (dear son). Standard internet forum language used by people of all backgrounds and ages, on all sorts of websites, liberal, conservative, feminist, whatever. No need to specifically call out "older men" and imply bad behavior for this universally accepted term.

Maybe older men are not the only ones that need to check their prejudices. :annoyed
The abbreviation "DW" is mostly used by older men if for no other reason than they are the most likely people to be married to women. Check any chart of marriage rates by age and gender and you will see why this is true. Similar reasoning would apply to the other terms you mention. Even then, usage of those terms skews higher by age.

blinx77
Posts: 227
Joined: Sat Jan 07, 2012 11:23 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by blinx77 » Sun Apr 08, 2018 3:11 pm

Pajamas wrote:
Sun Apr 08, 2018 3:07 pm
blinx77 wrote:
Sun Apr 08, 2018 2:57 pm
Yes. As is DH (dear husband), DD (dear daughter) and DS (dear son). Standard internet forum language used by people of all backgrounds and ages, on all sorts of websites, liberal, conservative, feminist, whatever. No need to specifically call out "older men" and imply bad behavior for this universally accepted term.

Maybe older men are not the only ones that need to check their prejudices. :annoyed
The abbreviation "DW" is mostly used by older men if for no other reason than they are the most likely people to be married to women. Check any chart of marriage rates by age and gender and you will see why this is true. Similar reasoning would apply to the other terms you mention. Even then, usage of those terms skews higher by age.
Ok. Well "DH" is commonly used by young (30ish) feminist women on DC Urban Moms, for example. I may have read into your post more than you intended when you talked about irony, and I apologize if that's the case.

I have no idea how the term started or who started it, but it's pretty standard and not political or gendered.

daveydoo
Posts: 1349
Joined: Sun May 15, 2016 1:53 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by daveydoo » Sun Apr 08, 2018 3:11 pm

randomguy wrote:
Sun Apr 08, 2018 3:06 pm
You need one that only invests in company with white male ceos that degrade the environment or produce leathal weapons.
I believe we have this -- it's called the "stock market." :D

My actual comments are above.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

blinx77
Posts: 227
Joined: Sat Jan 07, 2012 11:23 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by blinx77 » Sun Apr 08, 2018 3:18 pm

Pajamas wrote:
Sun Apr 08, 2018 3:14 pm
blinx77 wrote:
Sun Apr 08, 2018 3:11 pm

Ok. Well "DH" is commonly used by young (30ish) feminist women on DC Urban Moms, for example. I may have read into your post more than you intended when you talked about irony, and I apologize if that's the case.

I have no idea how the term started or who started it, but it's pretty standard and not political or gendered.
The reason I pointed out that it was not used ironically was because someone asking what it means is very likely to be young and might very likely think that it was meant to be ironic once they knew what it meant.

https://www.reddit.com/r/oldpeoplefacebook/
Thanks, understood. I think we can chalk this up to the difficulties of communicating in text on a forum and not real time. I'll rescind my comment and off to help DD learn to ride her bike. Happy Sunday and carry on! :beer

david1082b
Posts: 364
Joined: Fri Jun 09, 2017 12:35 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by david1082b » Sun Apr 08, 2018 3:19 pm

The main study in the Fortune article is about women-led companies, specifically CEOs. PXWEX and GWILX don't simply invest in stocks with women CEOs. So we can't compare these funds to the article's study anyway.

One thing we could look at is how mid-caps and small-caps outperformed the S&P 500 a lot since the early 2000s, the time of the study's beginning. Are women more likely to be CEO of small and mid-caps than large-caps? S&P 500 SPY versus MDY mid-cap and IJR small-cap from Jan1st 2002 to December 31st 2014: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

daveydoo
Posts: 1349
Joined: Sun May 15, 2016 1:53 am

Re: “Women-led companies perform 3x better than S&P 500”

Post by daveydoo » Sun Apr 08, 2018 3:32 pm

blinx77 wrote:
Sun Apr 08, 2018 3:18 pm
Thanks, understood. I think we can chalk this up to the difficulties of communicating in text on a forum and not real time.
Imo, the wonderful thing about "DH" (and DW and DS, etc.) is that it is used ironically or with genuine affection -- and it's never apparent to the reader when it's one or the other. Puts us all on equal footing.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

hilink73
Posts: 274
Joined: Tue Sep 20, 2016 3:29 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by hilink73 » Sun Apr 08, 2018 3:57 pm

nisiprius wrote:
Sun Apr 08, 2018 2:28 pm

It ain't that simple, folks.
Exactly.
And sexist in both ways. (Feminists claiming women are better leaders show the same sexists attitude like men claiming men are the better leaders.)

So, I stick with the market indices.
No place for gender discussions where my money should grow.

02nz
Posts: 468
Joined: Wed Feb 21, 2018 3:17 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by 02nz » Sun Apr 08, 2018 4:03 pm

I think inclusion and diversity are important and can absolutely contribute to an organization's effectiveness and performance. But neither gender is inherently better at managing companies than the other, so investing using gender as a primary criterion seems wrong-headed.

JBTX
Posts: 3571
Joined: Wed Jul 26, 2017 12:46 pm

Re: “Women-led companies perform 3x better than S&P 500”

Post by JBTX » Sun Apr 08, 2018 5:14 pm

Pajamas wrote:
Sun Apr 08, 2018 1:50 pm
BogleBoogie wrote:
Sun Apr 08, 2018 1:29 pm
What does "DW" stand for?
"Dear Wife"

Mostly seems to be used by older men and without irony even when discussing feminism.
Interesting. I thought it was kind of what you are supposed to do here. Part of the lexicon. I had no idea some people would be offended by it. I see DH also.

User avatar
LadyGeek
Site Admin
Posts: 46671
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: “Women-led companies perform 3x better than S&P 500”

Post by LadyGeek » Sun Apr 08, 2018 8:48 pm

I removed some off-topic posts related to gender. This thread has run its course and is locked (derailed).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Locked