DWS Invest ESG Women for Women invests in companies with strong ESG credentials, with particular attention to social aspects. Fund manager Katharina Seiler discusses how it will be run by women and invest only in companies addressing women’s issues.
· All of DWS’s female fund managers are co-operating in the management of the new fund
· The fund will invest in a global universe, selected by DWS’s new social scoring system
· DWS affirms that companies that manage social factors best, will also be those companies which will outperform
· The team are appealing to women to invest: “Women wake up – you have to take care of your long-term financial provision”
DWS has launched a new sustainable equity fund with a twist. DWS Invest ESG Women for Women will not just pay particular attention to social aspects – to the “S” in “ESG”, but most especially to those relevant to women. It will also be run by an all-female team led by Dr Katharina Seiler, Senior Equity Fund Manager.
Seiler tells Impact Investor: “This is an old idea. For the last fourteen years I’ve worked with a product specialist, Denise Kissner, and I introduced this idea to her around ten years ago. At that time though, we couldn’t make it work as we lacked sufficient data. Then, last year, Denise came to me and said, “now the time might be right”.”
“Whilst there has been a large increase in interest in ESG factors in assessing companies, it’s been dominated by environmental considerations, and social aspects have been less in focus. We are about to change that.”
Seiler outlines the intellectual background to this move. “There has been a lot of academic work done in this area by consultant firms in recent years. This research has clearly shown that companies that put more emphasis on ESG factors can outperform those that don’t.”
In addition, she asserts “data from the Bank of America shows that social factors can be even more important than environmental ones in determining companies’ share price performance”.
DWS’s new social scoring system
DWS’s existing scoring system, was expanded by “putting a greater emphasis on social factors, and by adding a social commitment score”. Seiler looked at a universe of more than 3,000 companies globally, to assess the best social performers, using five KPIs.
These were gender equality, equal opportunity, management gender representation ratio, family care, and flexible working environment.
Regarding this last factor, Seiler notes that “Covid has had a significant positive effect, in that it has dramatically increased work from home and opened everyone’s eyes up to the benefits of flexible working”.
DWS analyses those 3,000 companies and categorises them from ‘A’ to ‘F.’ “All five of the KPIs are important, there is not one which stands out. A company needs to address all of them.”
In the A category – companies that scored highly on all five KPIs – there are apparently just thirty companies, a mere 1% of the total universe.
“We obviously can’t invest only in those as we’re looking to have a diversified portfolio,” she explains. “We move on to eliminate those companies which fall in categories ‘E’ and ‘F’ giving us a total investable universe of around 1600 companies.”
DWS is not just looking for the best in class. “We are particularly focused on those companies that are changing their scores. We have identified that the direction of travel is a very important indicator of future performance. Companies that are improving their policies in this area are likely to outperform. It is also very much our intention to have a positive social impact, to engage with companies and persuade them to improve,” she notes.
The 3,000 companies in the universe are widely spread geographically. Seiler says: “European companies tend to score highest, US companies are in the middle, lots of ‘C’s, and emerging market companies tend to be at the bottom end of the scale.”
The Team of Twelve
The fund will be managed by a team of twelve women. “In choosing only women we’re not implying that women are better than men at picking stocks. Instead, by this design, we address the special needs and reflect the diversity of our target group.”
The team consists of the twelve female portfolio managers across the DWS equity investment equity platform. “We are twelve very different women with different backgrounds and nationalities and at different stages in our lives.”
There are eight nationalities represented – Iranian, Russian, Korean, Indian, American, Bulgarian, Polish and German.
Each of the twelve women has very different regional and sectoral expertise. “When we first came together on this project there was a fascinating and very profitable exchange between us, as we shared our different perspectives and experiences.”
“In choosing only women we’re not implying that women are better than men at picking stocks. Instead, by this design, we address the special needs and reflect the diversity of our target group.”
Nature of the fund
DWS Invest ESG Women for Women is a UCITS fund, according to Luxembourg law, under its SICAV umbrella. There is no target fund size.
Seiler says: “We are focusing on key long-term trends such as education, renewable energies, infrastructure, health, research and connectivity. We are looking for high quality companies that have sustainable growth. With 100 to 120 stocks this will be a diversified fund.”
“We have launched the fund so far in Germany, Luxembourg, Switzerland, Austria, Spain, Denmark, Finland, Norway, Sweden and in the UK. Our intention is to gradually roll it out across further countries and regions.”
Appealing to women investors
“So far, we have had a very positive response from our pre-marketing.” It is a very important aspect of the fund launch to encourage female participation in equity markets. “This is a retail fund which is seeking to communicate the message “women wake up – you have to take care of your long-term financial provision.””
“From the start the idea was rooted in the desire to generally improve women’s participation in equity markets. It appears women control only 30% of global assets although they obviously make up 50% of the population.”
Seiler says “there are many different reasons behind the low investment of women in equity markets. We hope that we can give these women a profound sense of trust due to the specific setup of an all-women fund management team.”
“We hope that this fund which is managed purely by women will attract the interest of more female investors. We are determined to contribute as a team of women professionals to inspire the confidence amongst more female investors.”