With theDWS Invest ESG Women for Women"DWS launched a sustainable women's fund on January 17, 2022, which is managed by a team of 12 female fund managers. We talk to three of them about what actually constitutes female portfolio management: Valerie Schüler, Katharina Seiler and Lilian Haag.
ESG investments are on everyone's lips, but for a long time the focus was on environmental factors. Is it now the time for social factors?
Lilian Haag: For us, greater inclusion of social factors in investing is a further logical step. With the social debate surrounding climate change, many sustainability funds have weighted environmental criteria comparatively more heavily than social factors in recent years. Among other things, this had to do with the data situation: It was easier to measure how many tons of CO22 or plastics companies have saved per year than finding out which companies offer family-friendly jobs, for example. In the meantime, however, the data situation has improved dramatically. With the new sustainability indicators focused on social criteria, we can assess much better than before how well companies are performing in terms of social values and working conditions. Therefore, the time has now come to give greater consideration to social criteria - especially as they undeniably represent an increasingly important success factor for companies.
Diversity is one of the social factors. Why is diversity important for companies?
Valerie Schüler: Diversity can have a positive impact on corporate productivity and profits, which should also lead to better stock market performance in the long term. We firmly believe that diverse teams can make better decisions because they bring together more perspectives and challenge decisions from different angles. If everyone in the team only thinks in the same direction, there is a risk of cluster risk.
What other "S factors" do you look for when selecting titles for the DWS Invest ESG Women for Women especially?
Katharina Seiler: We focus primarily on companies that attach importance to fair working conditions and diversity. This involves, for example, equal opportunities for all people, regardless of age, gender, origin, religion or sexual orientation. But it is also about how companies deal with the issue of gender equality, including at management level. We also take a look at what companies are doing to reconcile family and career and whether they offer their employees flexible working conditions. Particularly in terms of flexibility, many companies have recently performed better due to corona-related home office arrangements. However, it is not only companies that are already leaders in terms of social factors that are considered for our portfolio. We also shortlist companies that are not yet pioneers in terms of social factors, but are making significant progress.
With the launch of the fund, does DWS merely want to offer a new, specially targeted investment vehicle, or is it also about a social appeal?
Lilian Haag: We are pursuing several goals with DWS Invest ESG Women for Women. First, we want to motivate more women to invest. Second, we want to inspire more women to take up a job in the financial industry or the asset management industry. Currently, only ten percent of fund managers are female. So there is still a lot of room for improvement here. And thirdly, we want to have a positive impact on companies that want to improve in terms of social factors and fair working conditions. To this end, we are in close contact with the decision-makers to sound out the next steps and define targets.
Who is the target group for this fund? Which investor groups have already expressed interest?
Katharina Seiler: In principle, our target group includes all investors, regardless of their gender. However, with our focus on sustainability and social aspects, we cover topics that particularly appeal to women - even when it comes to investment decisions. Overall, women still take too little care of their own finances. This is also because they often do not feel addressed by conventional financial products. This is where we come in with our fund. We want to motivate women to take their wealth accumulation into their own hands. To date, only one in eight women invests her money in the stock market, although around 80 percent of women save regularly. In view of the looming pension gap, it is extremely important to find an alternative to a savings account in good time - in other words, to invest in the capital market.
Is fund management actually more of an art or science-based work?
Valerie Schüler: It's a mix of both. There is no one textbook way that automatically leads to outperformance. Every portfolio manager must develop a strategy for himself that will help him achieve good performance. To do this, he can draw from the toolbox of scientific teaching. However, the right mix and the specific focus remains the art of every portfolio manager. At DWS Invest ESG Women for Women, we place great emphasis on fundamental analysis. We therefore engage in classic stock picking, for which we put the companies through their paces. However, it is not only the selection of the right stocks, but also a knack for the right timing for entry and exit and a long-term view that are important for the success of our investment decisions.
In your experience, do women manage a fund differently than men?
Valerie Schüler: It's hard to say, because in principle every single portfolio manager - more or less regardless of gender - has a different approach. However, there are studies that show that women have a stronger focus on risk, which can definitely be positive for investment decisions. You have to know when it might be worth taking a higher risk with a stock. It's helpful to have a set risk budget that you don't exceed. With regard to our all-female team, we are convinced that the diversity of opinions and the intensive exchange can provide real added value for the fund.
I was a bit surprised when I read that the DWS Invest ESG Women for Women is managed by a team of 12 female fund managers. Isn´t that a bit much? Or how are the tasks distributed?
Lilian Haag: We have organized ourselves very efficiently. We primarily exchange information at the sector level, across all regions. For this purpose, we have formed six sector teams, each with 3-4 female experts who propose the stock selection. In a monthly decision-making process, the proposals of the sector teams are discussed and implemented in the fund. We have been working together in this constellation since spring 2021 and have gained a lot of experience. It is important to all of us that each fund manager can contribute and that many different aspects are incorporated into the portfolio.
Are companies that take the "S factor" into account actually more successful on the stock market than others?
Katharina Seiler: Over a five-year period, well-positioned U.S. companies in the S&P 500 Index have outperformed the broad market in terms of the "S factor.
You said that you would like to motivate women to take their wealth accumulation into their own hands, which is important in view of average retirement pensions for women, among other things. What actions are you planning here?
Katharina Seiler: In the future, we would like to focus on financial education for women. Women need a different approach than men if you want to get them interested in the topic of investing.
Many Thanks for the interview!
Photo: Pictured from left to right are: Lilian Haag, Dr. Katharina Seiler and Valerie Schüler.