How your portfolio will be impacted by the gender war sparked by AMP Limited

Retail investors shouldn’t be standing on the sidelines while the gender debate on the ASX is raging. This issue can drag on shareholder returns. Here’s where…

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Gender Wars

The spectacular fall from grace of AMP Limited (ASX: AMP) has thrown the gender debate into the spotlight at a time when our market operator ASX Ltd (ASX: ASX) is mandating gender quotas on company boards.

It’s an uncomfortable topic of discussion (almost as uncomfortable as talking about race) but investors shouldn’t squirm from taking a hard look at this issue as it can affect the share price performance of stocks across the market.

I won’t be adding voice to the public flogging of AMP’s chair Catherine Brenner, she did after all make a big stuff-up and that’s putting it politely, but I will point out that Commonwealth Bank of Australia (ASX: CBA) chief executive Matt Comyn seems to have been given a slap on the wrist in comparison when he used to be in charge of the bank’s retail division, which is at the heart of the AUSTRAC investigation.

What’s good for the goose has cooked the gander!

But coming back to the issue closer to the hearts of investors than gender wars – shareholder returns. There are reasons to believe that women led organisations perform better than men.

A study reported in Fortune by trading platform Quantopian found that female CEOs in Fortune 1000 companies generated significantly stronger returns for shareholders.

The 2015 study looked at women-led companies at the 1000 biggest US companies (by revenue) and compared that to the S&P 500 index from 2002 to 2014. It found that the female touch produced equity returns that were 226% ahead of the US stock benchmark.

I couldn’t readily find a similar study for the ASX (maybe that doesn’t matter given the small sample size which will undoubtedly skew the data), and the Quantopian study is only but one study and I can’t verify the integrity of the data.

However, the Quantopian findings are consistent with a host of other research that ranks women ahead of men as corporate leaders – yet gender is not something investors pay any attention to.

Have you ever thought “I would buy this stock in part because there is a female CEO”? I know I haven’t and I don’t know of any fund managers or professional investors who put any weight into this issue (although I am sure there is a tiny minority that does).

I am not saying that CBA, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB), Australia and New Zealand Banking Group (ASX: ANZ) and AMP wouldn’t have found themselves in the mess revealed by the Banking Royal Commission, but I think the gender issue should be something that retail investors should pay more attention to.

After all, investor apathy is the reason why we all share part of the blame for the large gender inequality among our listed companies.

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Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, National Australia Bank Limited, and Westpac Banking. The Motley Fool Australia owns shares of ASX Limited and National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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