Markets

How Gender Diversity Enhances the Bottom Line

Published

6 years ago

January 23, 2018

Jeff Desjardins

How Gender Diversity Leads to a Bigger Bottom Line

Despite making up half of the population and 47% of the labor force, women remain highly underrepresented in the top echelons of business.

5% of the richest billionaires are women
6% of S&P 500 companies have women CEOs
20% of Fortune 500 board members are women

There are many arguments that can be made for closing this gender gap, but the most compelling one is very simple: there’s a growing body of research that shows that gender diverse companies make more money.

Women and Profit

Today’s infographic comes to us from Evolve ETFs, a company that has launched an ETF focused on gender diversity, and it shows that companies with more women in senior roles are making better decisions and ultimately higher profits.

Better Decisions
The more diverse a team is, the more likely it is to make the best business decision. Logically, this makes sense, since multiple perspectives are considered this way – and groupthink can be avoided.

There have been various studies on decision-making that show this, but one compelling example highlighted by Forbes covers 600 business decisions made by 200 different teams over a two year span. This research found that more diverse and inclusive teams made better decisions up to 87% of the time, took less time to make the decision, and delivered 60% better results.

Better Bottom Line
Not surprisingly, making better business decisions leads to bigger returns, as well. Credit Suisse, for example, found that boards with more women had a 36% higher return on equity.

Meanwhile, research from Morgan Stanley found that the top-third of companies (that hire the most women) had 2% higher equity returns than average.

A final study worth noting is from The Peterson Institute for International Economics, a Washington, D.C. think tank, which shows that companies with at least 30% female leaders end up raking in 6% higher net margins.

Future Growth

On the company level, gender diversity means more profit and better decisions – but what could this mean in aggregate?

Global management consultancy firm McKinsey & Company offers up a rosy picture: they figure that if the gender gap is closed in their “full potential” scenario, up to $28 trillion extra could be added to global GDP growth by 2025.

Related Topics:stocks women diversity gender profits

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Markets

The European Stock Market: Attractive Valuations Offer Opportunities

On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?

Graphics & Design

Alejandra Dander

An infographic showing that compared to North American and Asian stocks, the European stock market has lower or comparable valuations and low-to-moderate correlation.

European Stock Market: Attractive Valuations Offer Opportunities

Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.

The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.

Attractive Valuations

Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.

Index	Price-to-Earnings Ratio	Price-to-Book Ratio
EURO STOXX 50	14.9	2.2
STOXX Europe 600	14.4	2
U.S.	25.9	4.7
Canada	16.1	1.8
Japan	15.4	1.6
Asia Pacific ex. China	17.1	1.8

Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.

On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.

Research also shows that lower price ratios have historically led to higher long-term returns.

Market Movements Not Closely Connected

Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.

The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.

	EURO STOXX 50	STOXX EUROPE 600	U.S.	Canada	Japan	Asia Pacific ex. China
EURO STOXX 50	1.00	0.97	0.55	0.67	0.24	0.43
STOXX EUROPE 600		1.00	0.56	0.71	0.28	0.48
U.S.			1.00	0.73	0.12	0.25
Canada				1.00	0.22	0.40
Japan					1.00	0.88
Asia Pacific ex. China						1.00

Data is based on daily USD returns.

European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.

Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.

Tracking the Market

For investors interested in European equities, STOXX offers a variety of flagship indices:

Index	Description	Market Cap
STOXX Europe 600	Pan-regional, broad market	€10.5T
STOXX Developed Europe	Pan-regional, broad-market	€9.9T
STOXX Europe 600 ESG-X	Pan-regional, broad market, sustainability focus	€9.7T
STOXX Europe 50	Pan-regional, blue-chip	€5.1T
EURO STOXX 50	Eurozone, blue-chip	€3.5T

Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.

The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.

“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX

Partnering with STOXX to Track the European Stock Market

Are you interested in European equities? STOXX can be a valuable partner:

Comprehensive, liquid and investable ecosystem
European heritage, global reach
Highly sophisticated customization capabilities
Open architecture approach to using data
Close partnerships with clients
Part of ISS STOXX and Deutsche Börse Group

With a full suite of indices, STOXX can help you benchmark against the European stock market.

Learn how STOXX’s European indices offer liquid and effective market access.

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