Blackrock report finds ‘sweet spot’ for gender diversity
There is a “sweet spot” on the spectrum of women’s representation, according to a new report from Blackrock on Thursday.
It claimed that neither under nor over-representation is optimal for a firm’s performance.
Blackrock found that companies in the middle quintile for gender balance reported an average annual return on assets of 7.7 per cent over the 2013 to 2022 period.
This is compared to a return of 5.6 per cent for those with the highest proportion of men and 6.1 percent for those with the highest share of women.
The report said that by increasing women’s representation by just 1 percentage point, there was an associated 3.5 basis point increase in return on assets during the firm’s next financial year.
Women in the driver’s seat
Women’s representation tends to deteriorate with seniority and Blackrock’s report found that this was a clear detriment to performance.
The report said companies where middle management best mirrors women’s representation in the overall workforce generated 36 basis points higher risk-adjusted monthly returns compared to peers where this metric was poor.
However, companies where women were in the driving seat tended to outperform, despite women holding only six per cent of CEO seats last year.
Blackrock said the MSCI World Index companies with female CEOs outperformed companies run by men by 1.0 percentage point on average when it comes to return on assets.
This dynamic was particularly notable in the investment and start-up world.
Women-owned or women-managed hedge funds outperformed an average hedge fund by 10.5 per cent over 16 years. Meanwhile, a survey of 350 startups showed that women-owned startups delivered twice as much per dollar invested compared to those founded by men.