”Emerging markets present an incredible opportunity for capturing meaningful alpha for their economic growth potential and young, fast growing populations. The opportunity is even greater with the consideration of Womenomics and the inclusion of a critical, but often excluded part of the population, women.”


Basak Yavuz, Fund Manager, Emerging Markets Equities, Goldman Sachs Asset Management

Goldman Sachs published their first report on Womenomics in 1999 centered around the notion that gender diversity is critical for commercial success. Over twenty years later, Womenomics has undoubtedly gained momentum as the need for gender diversity and inclusion are more important now than ever. In this piece, Basak Yavuz, the co-head of Goldman Sachs Asset Management’s Emerging Markets Equity franchise bringing with her 20+ years of industry experience, shares her insights on the importance of Womenomics in Emerging Markets.


WIF: How does Goldman Sachs/GSAM think about Womenomics? Why is it important?

Womenomics is not just an issue of equitability, it’s an issue of profitability. The inclusion and advancement of women is critical to the long-term, commercial success of not only our business, but every business.

On our team, we passionately believe diverse and inclusive teams create a healthy environment of variant perspectives that lead to better investment outcomes. We believe diverse teams have the potential to outperform and that is reflected in the composition of our team. Around 40-50% of GSAM Fundamental Equity’s ~$60 billion in assets under supervision[1] is managed by women, which is much higher than the industry average. Globally, only 14% of fund managers are women; in the U.S. female fund managers make up just 11%.[2] Emerging market equity funds are quite similar with very few female listed portfolio managers and still those teams lack inclusivity as oftentimes the female portfolio manager is more junior or working alongside a larger team. Diversity and inclusion need each other in order to foster success. It is not enough to simply hire women, there must be women in position of power to truly reap the benefits of Womenomics.

We believe the industry leading diversity of our investing team is an enduring competitive advantage in our pursuit of outperformance for our clients. Over the 1 year, 86% of GSAM Fundamental Equity strategies have outperformed benchmarks on a gross of fees basis.[3]

WIF: How does your team integrate Womenomics considerations into Fundamental investing?

As part of our fundamental assessment of business quality and focus on ESG integration, we assess a company’s diversity and inclusion (D&I) practices holistically, monitoring leadership, pipeline demographics, employee retention and satisfaction, and pay parity, among other factors.

We do this through 1) ESG integration 2) idea generation (investing in solutions providers to D&I), and 3) engagement.

  • ESG integration: We look for companies that reflect the broader society they are a part of, and exhibit strong D&I practices.
  • Idea generation: We look for solutions providers, whose focus on D&I will allow them to understand and innovate for a more diverse customer base and/or capitalize on broader macro diversity & inclusion-related trends.
  • We drive change on D&I through stewardship and engagement: We have prioritized diversity in our stewardship efforts and are one of the first major global asset managers to vote against the entire nominating committees of any public company board, globally, with no women. One engagement initiative of ours included sending letters to ~50 companies where we voted against a Board member for lack of female representation in an attempt to engage with each of them. Since sending letters GSAM has had a dialogue with companies, providing potential board candidates to companies and as a result, 32% have added a female to the board.

WIF: Why is Womenomics so important in Emerging Markets and in your portfolio companies? What are the biggest opportunities?

Emerging markets present an incredible opportunity for capturing meaningful alpha for their economic growth potential and young, fast growing populations. The opportunity is even greater with the consideration of Womenomics and the inclusion of a critical, but often excluded part of the population, women.

The majority of this population is excluded financially with ~60% of the women in emerging markets lacking access to financial services.[3] That systematic exclusion creates an extra burden on women and can further hinder their ability to achieve financial freedom, create wealth, and start businesses, etc. This need for financial inclusion has provided a great opportunity for financial companies that offer microfinancing and consumer credit and we feel more comfortable owning those which understand and support financial inclusion of women. I can attest to the importance of store cards, for example, from my own time growing up in Turkey, as the store cards were critical for my family and many around us for clothing and other discretionary services, providing access and affordability. Customers were almost always woman and they always paid on time.  

This exclusion is further damaging in that its women who typically make household spending decisions. On average, ~90% of women reported controlling or sharing daily shopping, compared to only ~40% of men[4] and the same has been true in my family for many generations. That amounted to ~$30 trillion in consumer spending by women in 2019.[5] With women driving the majority of consumer decisions, its important that companies are appealing to their audience and successful companies need to reflect the society they are part of – and once again, it is not just an issue of equitability, it is an issue of profitability. With greater emphasis on Womenomics, companies automatically improve their chances to better understand their diverse client base; come up with the right products; land on right marketing message; and maintain critical tie between brand and trust.

We believe that emerging markets present a wide river opportunity and will benefit from the further implementation and development of Womenomics.

WIF: While there is a lot of work to be done, what is one area where you have seen meaningful improvement?

There is proof of concept behind Womenomics in both Japan and broader Europe and we see an ever greater opportunity in the developing world. 

Womenomics has been instrumental for a country like Japan that has long faced economic constraints from their shrinking and aging population. Japan had a lot to overcome starting behind many of its peer countries on gender diversity. Much has changed in the 20 years since Goldman Sachs’s first report on Womenomics. Since then, Japan has experienced the benefits of Womenomics which has contributed to a record female labor participation rate of ~70%, higher than both the US and Europe. Japan also enjoys one of the most generous parental leaves globally, along with better gender transparency, and more equal pay. As a result, the country has seen consistent GDP growth and better corporate performance.[7]

 Similar to Japan, Europe has also had success from their focus on Womenomics. Europe has seen a rising female labor participation rate across all age groups, particularly in “prime” age groups, thanks in part to better parental leave and more accessible childcare. While the pay gap across Europe varies, it is still lower in most countries compared to both the US and Japan. In addition, there has been a ~20% increase in females on boards in the STOXX 600 from 2005. Europe has also proven that while employing more women is beneficial, ensuring there are women in senior roles is even more critical for driving outperformance of stock price. That outperformance is measurable and can see be seen in Goldman Sachs’ Europe Womenomics basket (GSSTWOMN).[8] 

While there is still progress to be made, Japan and Europe have proved that Womenomics is not only good for society, but for the economy. We believe there is no reason that emerging markets cannot follow a similar path.

You can hear more from Basak at the Women in Finance Virtual Summit on 10 November 2020. To find out more and register your free place, please click here.

[1] As of September 30, 2020. Assets Under Supervision (AUS) includes assets under management and other client assets for which Goldman Sachs does not have full discretion.
[2] Source: Morningstar, Women in Investing: Morningstar’s View. As of March 2020.
[3] As of 23-Oct-20. Gross of fees, Source: GSAM Controllers weekly performance data.
[4] Source: ASA International, 2019.
[5] Source: Nielsen, 2019.
[6] Source: World Data Lab, 2019.
[7] Source: Goldman Sachs. Womenomics 5.0, April 2020. https://www.goldmansachs.com/insights/pages/womenomics-5.0/
[8] Source: Goldman Sachs. Womenomics: Europe Moving Ahead, October 2020. https://www.goldmansachs.com/insights/pages/womenomics-europe-moving-ahead.html
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