LGIM's gender diversity fund outperforms FTSE 350 in first year

Jessica Clark
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LGIM head of investing Helena Morrissey (Source: Getty)

A fund that invests in UK companies that are prioritising gender diversity has marked its one-year anniversary, having encouraged firms to boost the number of women in leadership positions.

Legal & General Investment Management’s (LGIM) Gender in Leadership UK index fund (Girl fund) allocates a score to FTSE 350 firms based on the number of women on boards, in executive level roles, management and the overall workforce balance, and invests more heavily in firms with higher scores.

Read more: 'Lack of confidence' to blame for gender investment gap

Companies must achieve 30 per cent female representation across the four categories in order to receive a positive score and LGIM also engages with firms that are lagging behind in the list to drive diversity.

Diversity scores have improved by eight per cent on average since the launch of the fund, which outperformed the FTSE 350 benchmark by 1.5 per cent since it launched in May last year.

“This is obviously a very small part of our assets under management but [we] take the same engagement approach. Companies don’t like being voted against,” Helena Morrissey, head of investment at Legal and General Investment Management, told City A.M.

“What we were seeing is people showing slight disbelief that this would be a big enough issue, but now people are recognising that we are not going to go away.

“Some companies say ‘we’re doing a lot’ but we do expect people to do more, because it’s not something that anyone could claim victory on.”

Read more: Meet the male business chiefs helping the drive for gender equality

Figures compiled by LGIM show that workplace gender parity could add an estimated £180bn to the UK's GDP and that boardroom diversity has increased 16 per cent since 2014 and 54 per cent since 2010.

The fund also excludes companies that are involved in controversial weapons, pure coal mining companies and firms that do not comply with the United Nations Global Compact screening criteria.