The Quarterly Statement: Q4 2017

January 22nd, 2018


While 2017 was a strong year for global risk assets, it also marked a continuing transformation in the mindset of investors. As markets have evolved, so has the interest in impact investing, also known as ESG (environmental, social and governance) investing. This investment discipline emphasizes factors to help select environmentally friendly and socially aware companies that also exhibit solid governance policies. The speed with which impact investing has gained mainstream appeal is notable, as evidenced by the 33% increase from 2014 to 2016 in total U.S.-domiciled assets under management to $8.7 trillion1

Proponents of impact investing believe they can strategically align investments with their mission without sacrificing competitive returns.  One particularly compelling approach to ESG investing, the selection of stocks through a gender lens, appears to have strong merit, on both impact and returns.

Certainly, the meteoric rise in ESG investing occurs as women in the workforce are on the brink of several milestones. For example, women now hold 19.8% of board seats of companies in the Fortune 10002.  In the S&P 500, this percent is close to a quarter of all companies (Exhibit 1). In addition, the mix of new board membership also reflects progress, with females comprising over a third of new board members in the S&P 500 in 20173.

This progress is promising, but in reality, women take on many roles within organizations, and therefore assessing the impact of women leadership should incorporate more than a just a measure of female board membership. For this reason, our analysis tests for one or more of the following characteristics within the Russell 1000 to help define a universe for Women in Leadership (WIL):

   • Women represent more than 20% of board members

   • Women represent more than 25% of senior management

   • A women is the CEO

   • A woman is the board chair

This universe has recently experienced sizable growth.  At the end of 2016, 650 companies met one or more of these criteria, yet by the end of 2017 this number had increased to over 700 companies. Further, growth has been most concentrated in the board membership and senior management categories over the past year (Exhibit 2).

With time, data availability and quality should improve given the mounting interest in understanding the increasing role of women in the workforce.  As older data is unreliable or unavailable, the monthly, equal-weighted data set utilized in our analysis starts in July of 2009.

When examining each component separately, annualized performance remains competitive with benchmark, but the risk reduction benefit in the form of lower standard deviation is more prominent (Exhibit 3). However, it’s the combination of these factors that is more compelling.

When comparing companies in the Russell 1000 with at least one of these qualities to the equal-weighted Russell 1000 through year-end of 2017, we find economically different risk and return characteristics, with a 0.6% increase in annualized excess return and a 1.3% risk reduction (Exhibit 4).

As investors become increasingly attune to investing alongside their principles, gender lens investing bears continued attention as its initial results indicate both excess return and risk reduction.   


Globally, risk assets continued their march higher during the fourth quarter as numerous geopolitical concerns seemed no match for expanding economic indicators, rising corporate earnings, and central banks staying on script.  In fact, all 2017 followed a similar pattern.

But as we enter 2018, we stop to reflect on market dynamics that greatly influenced 2017’s returns.


As we enter 2018, the path forward remains positive as the global economic expansion chugs on, but we are keenly aware of elevated valuations measures in the vast majority of asset classes.


 THE QUARTERLY STATEMENT is a Glenmede newsletter written by
 Peter J. Zuleba, III, President of Glenmede Investment Management



Please click 'Download' to access The Quarterly Statement: Q4 2017.

1U.S. SIF (The Forum for Sustainable and Responsible Investment). 2016. “Report on US Sustainable, Responsible and Impact Investing Trends.”

22020 Women On Boards.  2017.  “Gender Diversity Index: 2011-2017 Progress of Women Corporate Directors by Company Size, State, and Sector.”

3Spencer Stuart & The Wall Street Journal. “Women, Minorities Were Half of S&P 500 Directors Added in 2017.” November 2017.

All data is as of 12/31/17 unless otherwise noted. Opinions represent those of Glenmede Investment Management, LP (GIM) as of the date of this report and are for general informational purposes only. This document is intended for sophisticated, institutional investors only and is not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. GIM’s opinions may change at any time without notice to you.

This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. It may contain information which is not actionable or appropriate for every investor, and should only be used after consultation with professionals. References to risk controls do not imply that all risk is removed. All investments carry a certain degree of risk. Past performance of any strategy, area or security is not indicative of future performance. Information contained herein is gathered from third party sources, which GIM believes to be reliable, but is not guaranteed for accuracy or completeness.