With International Women’s Day just around the corner, the spotlight is on the power of women in business. Companies with strong female representation in executive roles and boardrooms have consistently outperformed predominantly male-led ones in terms of revenue growth, innovation and shareholder value.

The role of women in leadership has grown significantly over the years despite the challenges in achieving gender parity in corporate leadership. In the United States, women account for approximately 8.2% of CEO roles within S&P 500 companies. Similarly, women represent about 10.4% of leadership positions in Fortune 500 companies, with a record 52 female CEOs leading businesses on the list. 

While betting on an individual company is certainly a good option, investors can also play this space with lower risk and higher diversification benefits in a basket form. Currently, there are a few ETFs like SPDR SSGA Gender Diversity Index ETF SHE, Impact Shares YWCA Women’s Empowerment ETF WOMN, Hypatia Women CEO ETF WCEO, Fidelity Women's Leadership ETF FDWM and BNY Mellon Women's Opportunities ETF BKWO that offer broad exposure to women-led companies. 

Multiple studies highlight the economic benefits of gender diversity in the corporate world. According to a McKinsey & Company report, companies in the top quartile for gender diversity on executive teams were 25% more likely to achieve above-average profitability compared to those in the bottom quartile. Research from MSCI shows that firms with at least three women on the board experienced a 10% higher return on equity than those with all-male boards. This suggests that gender-diverse leadership teams may be more effective in driving company growth and shareholder value.

The presence of female leaders fosters better decision-making, broader market insights and stronger risk management — factors that contribute to long-term financial performance (read: Trade War Fears Surge: Sector ETFs & Stocks to Watch Out For).

Various studies suggest that companies with more women in leadership roles have better risk management capabilities. Women's leadership styles can often be more cautious and inclusive, leading to more thorough risk assessment and management strategies. Women bring in different life experiences and viewpoints, contributing significantly to the diversity.

Further, women control a large portion of consumer spending and, thus, can offer invaluable insights into market trends, customer needs and product development. Companies with female leaders are often more familiar with market demands.

ETFs in Focus

SPDR SSGA Gender Diversity Index ETF (SHE)

SPDR SSGA Gender Diversity Index ETF offers exposure to U.S. companies that lead their sector in demonstrating a commitment toward promoting and supporting gender diversity throughout all levels of the organization by tracking the MSCI USA Gender Diversity Select Index. It holds 252 stocks, with none accounting for more than 4.6% share. From a sector look, information technology, financials, healthcare and consumer discretionary receive double-digit exposure each. 

SPDR SSGA Gender Diversity Index ETF has amassed $250.1 million in its asset base while trading in a light volume of about 4,000 shares. It charges 20 bps in annual fees and has a Zacks ETF Rank #3 (Hold) (see: all the Large Cap Blend ETFs here).

Impact Shares YWCA Women’s Empowerment ETF (WOMN) 

Impact Shares YWCA Women’s Empowerment ETF has attracted $63.8 million in AUM and trades in about 3,000 shares a day on average. It tracks the Morningstar Women’s Empowerment Index, which is designed to provide exposure to companies worldwide with strong policies and practices in support of women’s empowerment and gender equality. 

Impact Shares YWCA Women’s Empowerment ETF holds 203 stocks in its portfolio, with none making up for more than 5.3% of the assets. The product charges 75 bps in annual fees and has a Zacks ETF Rank #3. 

Hypatia Women CEO ETF (WCEO)

Hypatia Women CEO ETF is an actively managed fund that invests in all publicly traded American companies that have female chief executive officers, from small-caps to mega-caps. It holds 176 stocks in its basket, with each accounting for no more than 1.1% of the assets. Industrials, financials, consumer discretionary, information technology and healthcare receive double-digit allocation each.

Hypatia Women CEO ETF has accumulated $4.2 million in its asset base and charges 85 bps in annual fees. It trades in a volume of under 1000 shares a day on average. 

Fidelity Women's Leadership ETF (FDWM) 

Fidelity Women's Leadership ETF is an actively managed fund that offers exposure to companies that prioritize and advance women's leadership and development. It holds 89 stocks in its basket, with each accounting for no more than 4.7% of the assets. 

Fidelity Women's Leadership ETF has accumulated $4.5 million in its base and charges 59 bps in annual fees. It trades in an average daily volume of 500 shares (read: Low-Beta ETFs to Hedge Against Trade War Risks).

BNY Mellon Women's Opportunities ETF (BKWO)

BNY Mellon Women's Opportunities ETF is an actively managed fund seeking long-term capital growth. It invests principally in U.S. companies that have attractive financial attributes and promote "women's opportunities." It holds 55 securities in its basket, with each accounting for less than 8% of the assets. From a sector look, information technology takes the largest share at 33.4% while healthcare, financials, and consumer discretionary round off the next three spots with double-digit exposure each.

BNY Mellon Women's Opportunities ETF has gathered $15.1 million in AUM and trades in an average daily volume of 1,000 shares. It charges 50 bps in annual fees from investors.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SPDR MSCI USA Gender Diversity ETF (SHE): ETF Research Reports

Impact Shares YWCA Women's Empowerment ETF (WOMN): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research