Can Women Really Retire Comfortably with Index Investing In Gender Equality?

In my prior article, Can Women Actually Retire Successfully by Investing in Gender Equality?, I highlighted mutual funds that use an active investing approach. In this approach, the portfolio managers for the mutual funds make decisions on what to include and exclude in their mutual fund.

An increasing number of people are investing in index mutual funds or exchange traded funds. Some refer to this as indexing or index investing. While you can’t invest directly into an index, such as the S&P 500, you can do so through a mutual fund or exchange traded fund that tracks an index.

These people most often have heard that low-cost investing overtime wins the higher return race. Passive investing is also known as low-cost investing or index investing. In this approach, mutual fund managers rely on an index provider’s rules for an investment’s inclusion in their fund.

The S & P 500 (Standard & Poors) is likely the most widely referenced index in the United States. In fact, many mutual funds and individuals use this for their investment comparison.

It is composed of the largest 500 publicly traded United States companies. There are more indexes that one can invest in. In fact, that doesn’t represent all the United States companies or in the world you can invest in.

That said, I entered the S&P 500 Index fund from Vanguard, into the Gender Equality Funds evaluator. Vanguard is most known for turning indexes from various providers into a fund you can invest into.

This index fund gets a B grade in Gender equality. However, it gets D grades in Fossil fuels, Prison industrial complex, Military weapons, and Tobacco. If those are issues for you, you may not be thrilled with this choice.

I am not picking on the Vanguard mutual fund. The S&P 500 index mutual fund or exchange traded fund should have the same 500 mutual funds as the S & P 500. That’s what makes it an index fund.

Here’s the returns for the various options of Vanguard’s S&P 500 index.

If you do want to follow the index investing approach, you do have choices such as the iShares MSCI KLD 400 index and the Vanguard FTSE Social Index. The Vanguard FTSE Social Index replicates the FTSE4Good US Social Index.

FTSE stands for The Financial Times Stock Exchange. It’s a British financial organization that specializes in providing index offerings for the global financial markets.

The FTSE4Good US Select Index is a market cap weighted index composed of large- and mid-capitalization stocks and is screened for certain environmental, social, and corporate governance (ESG) criteria.

The index also excludes the stocks of companies that, as FTSE determines, do not meet the labor, human rights, environmental, and anti-corruption standards as defined by the United Nations Global Compact Principles, as well as companies that fail to meet two of the following three diversity criteria:

(1) at least one woman on the board; (2) diversity policies in place; and (3) diversity management systems in place.

As you can see, while it has the same Gender equality grades, it scores better in the other categories except Deforestation. In that category, it maintains the same grade.

These returns are very similar to the S&P 500.

The MSCI KLD 400 Social Index is a capitalization weighted index of 400 US securities that provides exposure to companies with outstanding Environmental, Social and Governance (ESG) ratings and excludes companies whose products have negative social or environmental impacts.

The Index is designed for investors seeking a diversified benchmark composed of companies with strong sustainability profiles while avoiding companies incompatible with values screens.

This index scores an A for Gender Equality. Can you really retire while index investing in gender equality?

The iShares version actually has higher returns than the Vanguard S&P 500. Maybe that comes from the A grade for Gender Equality.

So can women actually retire successfully and comfortably using index investing?

As I stated in my earlier sister article, the short answer is yes! Whether you elect for active investing or passive investing, the answer involves calculating how much you will/can spend and then saving long enough. I believe in a diversified approach rather than just picking one type of investment.

I encourage you to either spend the time to learn more about risk adjusted return investing or find a qualified professional that does. While they don’t have to be a Certified Financial Planner or Chartered Financial Analyst, I think that’s a good start.

If any of these professional people start to tell you that investing in your values isn’t a good idea, you can either show them this resource or find another advisor! Believe it or not, most investment professionals are undereducated in this field.

Others work at companies that don’t allow them to access all the mutual funds and exchange traded funds listed through As You Sow. Still others aren’t investment adviser representatives, which limits their choices based on the mutual funds with share classes I discussed earlier.

I believe investing in companies that promote gender equality is a necessary step in gaining gender equality. Here’s to your gender equality powered retirement!