How women-led superannuation funds are doing better than their rivals
Monday, March 12, 2018/
Superannuation funds with 30% of women in leadership have outperformed male-dominated funds by $7 billion over three years, according to new research from Rainmaker.
To make the call, Rainmaker assessed 66 super funds and derived a weighted ratio of the proportion of each fund’s senior leadership roles held by women, including board chairs, chief executives, trustee directors and senior managers.
That so-called “W-index” was compared to the fund’s default option performance in relation to the industry average.
The survey discovered that one-third of the funds had a W-index score of 30% or more and that these funds seriously outperformed the average over time.
In 2015 that outperformance was 48 basis points, followed by 20 points in 2016 and 24 points in 2017. This outperformance meant that $7 billion in extra value was added to super funds.
Rainmaker said while this outperformance margin may seem small, it is significant. And the more important indicator was that the propensity of women-led funds to outperform was increasing.
“In 2015, 63 percent of women-led funds achieved above average returns but by 2017 this outperformance had climbed to about 70 percent,” Rainmaker chief researcher Alex Dunnin told The New Daily.
In contrast, male-dominated super funds were equally as likely to outperform as underperform.
Only not-for-profit funds were included in the research as the complex nature of the ownership structures of the for-profit sector meant a W-index could not be established for them, Dunnin said.
Debbie Blakey, the chief executive of health industry fund HESTA, was unsurprised by the findings.
“There’s lots of evidence that higher levels of diversity increase the quality of decision making,” she told The New Daily.
“Organisations that value diversity are more likely to be future focused as a broad range of perspectives helps foster creativity and critical thinking.”
Awareness of the importance of diversity in the corporate sector had increased strongly in the past five years with more women on boards and in management, Blakey said.
“But some funds haven’t got there yet.”
Despite this evidence of better performance, Rainmaker found that the 33% ratio of woman-led funds had not changed since 2015.
But the Association of Superannuation Funds of Australia, which represents for-profit and non-profit funds, said overall representation of women on super funds was increasing.
“In 2016, 28 percent of directorships of RSE [Responsible Superannuation Entity] licensees were held by women, an increase from 16 percent in 2006,” a spokesperson said.
The proportion of RSE licensees with at least two female directors increased from 25% in 2006 to 64% in 2016. The proportion of RSE licensees with no women directors reduced from 43% to 10% over the same period.
These changes can be partly attributed to the closure of corporate superannuation funds since 2006 as companies farm out their responsibilities to industry and retail funds. Around half of such funds had all-male boards.
A relatively small proportion of super fund boards had a majority of women directors or an equal number of men and women, including a number of retail funds.
Among industry funds, HESTA had a majority of female directors at June 2016 and Club Plus had an equal number.
Super funds in Australia with the highest W-index scores in the Rainmaker study were Commonwealth Superannuation Corporation, HESTA, Care Super, AvSuper, VicSuper, REI Super, Club Plus Super, MTAA Super, Tasplan and Energy Super.
In 2017, a study by Scandinavian bank Nordea of 11,000 globally-traded companies found that since the global financial crisis, listed companies led by women achieved investment returns of more than double the global index return.