Investing 2.0: A Modern Way to Invest

Today marks the launch of the Pax Ellevate Global Women's Index Fund. And I believe it also marks a step toward a more modern way of investing.

Two thoughts:

Over the past few years, the recovering-research-analyst-in-me has given a lot of thought to how businesses can function more effectively. As I reflected on my hard-won personal experiences in financial services -- and examined the reams of research on drivers of corporate performance -- the topic of diversity kept popping up…..as much as I kept trying to push it away.

Why push it away? Because for so many years, in any number of companies, corporate diversity efforts were HR-driven, tolerated, nice-to-do, check-the-box, get-ready-to-make-the-once-a-year-presentation-to-the-Board affairs.

But, as I looked, research study after research study indicated that diverse leadership teams suffer from less groupthink; diverse teams are associated with higher returns on equity, lower risk, greater client focus, greater long-term orientation, greater innovation, and even lower gender pay disparities. Thus, while gender diversity is a nice-to-do, I have become convinced that gender diversity is also a smart-to-do….and an under-appreciated driver of superior company performance.

Music to CEOs’ ears, right? Not so fast, because progress on gender diversity in corporate America has actually stalled….and in the financial services industry, we’ve gone backward. But within those averages are any number of companies that “get it” and are making real progress on this front, and should benefit from the results of that progress.

In recognition of the power of diversity as a business driver, last year I invested in the Ellevate global professional woman’s network (the newly renamed 85 Broads), as a means of providing the networking and education to women that can be key to their business success.

The second thought:

People will tell you what they want, if you ask them. And women are telling us, loud and clear, that they want to make a social impact: some 90% (!) of women globally say this important to them, according to recent research from the Center for Talent Innovation.

And many want this impact to be on business: in the same study, 77% (! again) of women globally say they want to invest in companies with diverse leadership teams. The women of the Ellevate network have told us exactly the same thing: that this matters to them.

This flip side of this is that women (and younger investors) also report that they feel disconnected from the financial services industry. And they are straightforward in the reasons why: the industry overall markets to them, but is not meeting their articulated needs. Providing them with the means to invest for impact is one such example.

Thus, I believe investing is in the early stages of a long-run transition. The conventional wisdom has been that investors must choose between earning a fair return OR expressing their values. (After all, isn’t impact investing about eating a lot of granola and hugging a bunch of trees?) The next wave of investors instead seek to earn a fair return AND express their values.

I see more and more forward-thinking Financial Advisors embracing this perspective, as values-based investing matures. And, make no mistake, this shift should not be threatening for Wall Street, but can be GREAT for Wall Street, as it searches for more modern value propositions.

These ideas come together in this new fund, in partnership with Pax World. Our goals are several-fold: to provide a means for people who are looking for broad global markets exposure to also benefit from the long-term returns that we believe diversity will drive. And to provide a markets-based solution and transparency to the diversity opportunity and challenge, by directing investor capital to the companies that are excelling on this front.

Sallie Krawcheck is the Business Leader of Ellevate Network and Chair of Ellevate Asset Management. Ellevate Network is 34,000-strong global professional woman’s network (formerly known as 85 Broads). Ellevate Asset Management was formed with a purpose of directing capital to companies that embrace gender diversity.

Investment return and principal value will fluctuate so that you may have a gain or a loss when you sell your shares. You should consider a fund's investment objectives, risks and charges and expenses carefully before investing. For this and other important information, please obtain a fund prospectus by calling 800.767.1729 or visiting www.paxworld.com. Please read it carefully before investing. Past performance is no guarantee of future results. Distributor: ALPS Distributors, Inc., Member: FINRA.

RISK: You could lose money on your investment in the Fund or the Fund could underperform because of the following risks: the market prices of stocks held by the Fund may fall; individual investments of the Fund may not perform as expected; the Fund’s portfolio management practices may not achieve the desired result. The Fund does not attempt to outperform the Index or take defensive positions in declining markets. Accordingly, the Fund’s performance would likely be adversely affected by a decline in the Index. Funds focusing on small/medium companies generally experience greater price volatility. Investments in emerging markets and non-U.S. Securities are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation, intervention and political developments. As this Fund can have a high concentration in some issuers the Fund can be adversely impacted by changes affecting issuers. There is no guarantee that the objective will be met and diversification does not eliminate risk.

Past performance does not guarantee future results. Index returns do not represent fund returns. One cannot invest directly in an index.

Effective June 4, 2014, the Pax World Global Women’s Equality Fund has reorganized into the Pax Ellevate Global Women’s Index Fund.

Distributed by ALPS Distributors, Inc. ALPS is not affiliated with Ellevate Asset Management