Feminize
Your Portfolio with FEMMX
by Kiersten Marek
Many of us are raised to believe that good people, especially good women, do not think and talk about money, and do not put money first. Although I believe it is unethical to put money first, I now know that thinking about money is not wrong, rude, or mercenary. Further, the more time I spend in the social work profession, the more convinced I become that women and helping professionals in particular need to think much more about money. They need to think about it and talk about it. They need to demand it in return for the work they do. They need to have more control over money in their workplaces and their homes. They need to manage money wisely and invest it strategically.
Two pioneering finance women, Linda Pei and Leslie Christian, figured this out long before I did, and in 1993 they founded The Women's Equity Mutual Fund. The Fund invests in companies that:
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promote women to top executive positions and compensate them accordingly;
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actively seek to have adequate female representation on their directorial boards;
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provide career development and training for women, including mentoring and networking groups;
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address family concerns of employees;
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present positive images of women in advertising;
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maintain accountability to employees, investors, and the local community.
How do these criteria play out in choosing the corporations for the FEMMX portfolio? Let's look at the example of TJX, one of my favorite companies, and a stock that we invested in long before we knew about The FEMMX Fund. TJX is the parent company for Marshalls, TJ Maxx, Home Goods, and AJ Wright, and several other off-price retailers in Canada and the UK. Through their corporate responsibility program, TJX is active on several frontiers for women.
Each store in the TJX group advocates for specific causes. Marshalls is an avid supporter of The Family Violence Prevention Fund. T.J. Maxx has been a major sponsor of Save the Children. T.J. Maxx also recently began supporting Zink the Zebra, a children’s foundation dedicated to developing respect, compassion and acceptance toward others. A.J. Wright donates to the local Boys and Girls Club whenever it opens a new store.
TJX has also been active on the frontlines of the Welfare-to-Work
program, having hired over 26,000 individuals from the welfare rolls
since 1997. In their vendor relationships, TJX reaches out to women
and minorities through their Minority and Women-owned Supplier Development
Program. TJX is also a member of the Women’s Business Enterprise
National Council and the National Minority Supplier Development Council.
In addition, TJX provides funding for a variety of disaster relief efforts including the Red Cross food pantry and Oil Heat Fund which helps needy residents of Massachusetts. In 2001, TJX extended its support of the American Red Cross for the victims of The World Trade Center tragedy.
Taken together, these efforts make TJX an excellent fit for the FEMMX portfolio. But the fund managers for FEMMX continue to advocate for enhancement of TJX's pro-woman policies. In a phone interview Heidi Soumerai, co-manager of The Fund, explained that FEMMX recently engaged in dialogue with TJX about reducing its direct-sourcing for merchandise produced in factories with poor labor standards. With only 10% of TJX's merchandise being bought through direct-source, this is a relatively small issue for the company. Nonetheless, TJX has agreed to stop buying products from substandard factories in Burma.
Although pro-woman policies are important, Ms. Soumerai stressed the rigorousness of The Fund's financial standards. The Fund vigilantly monitors the earnings quality and financial integrity of all of its companies. This was evident when, in the late 1990's, The Fund did not buy heavily into the technology sector, recognizing that valuations were too high. While this may have kept its financial return lower than some funds in the critical technology-soaring days, it also saved The Fund from being slammed in the post-bubble market.
Like many mutual funds, FEMMX is currently down for its 2003 return (as of the last revision of this piece on March 25, 2003), although its performance has been steadily improving over the past few weeks. They were also down last year, -14.59, their worst one year return to date. This may sound bad, but to put it in context, the category of mutual fund that they are in was down an average of -22.06. In other words, even though FEMMX was down in 2002, they were still performing in the top 5% for their fund category. For more quotes and research, you can view a FEMMX snapshot on Smartmoney.com.
"Our social research is rigorous and multi-faceted," said Ms. Soumerai. "In addition to public resources, we go directly to the companies in question for information and rely on a broad network of non-profits and ngo's (non-governmental organizations) to provide context as needed." The financial professionals at FEMMX pore over annual reports and other financial indicators for The Fund's portfolio, to ensure that the companies are continuing to produce high quality earnings.
The fund is relatively small, managing 12.68 million in net assets. Financial and healthcare sectors constitute 21.27% and 19.06% of the portfolio respectively. Most of their holdings are domestic (87%) and include companies like Bank of America, Fannie Mae, MBNA, Pfizer, and CVS. You can view a complete list of the FEMMX Portfolio here.
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Other Resources
American Womyn -- Investing Newsletter
Women's Financial Network at Siebert -- Muriel Siebert is one of the few female bank CEO's, and this is her financial network site.
Copyright © 2003 Kiersten Marek. All rights reserved. Liability Disclaimer
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