Values-Based Investing for an 'Emerging Market'

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Sallie Krawcheck professed she’s among the converted when it comes to values-based investing.

The former Bank of America and Citigroup executive said that while she’s throwing her weight behind her newly re-launched Pax Ellevate Global Women’s Index Fund (PXWEX), she wasn’t always a proponent of values-based investing.

“I was not a convert for it. Come on, niche, right?” she said during an interview at the Women Advisors Forum, an event produced by Financial Planning, On Wall Street and Bank Investment Consultant and held in New York on Tuesday.

However, Krawcheck’s partnership with Pax World Management to launch a new version of a previously underperforming vehicle appears to demonstrate her new attitude and offer one answer to the demands of a changing industry.


“Well, the important thing is, things are niches before they become super big,” she said "and this is what we hear from emerging classes of investors and what they’re looking for."

And according to Krawcheck, understanding and meeting the needs of an emerging client base is a top industry issue. "The challenge for all of us is to really look at what these emerging clients are looking for and deliver them."

It is clear, from her network and now her new fund, that Krawcheck believes strongly that women are a very important "emerging market." "I'm telling you, the emerging market is women," she told attendees.

But of course, women aren't the only piece of the puzzle. "What we’re talking about is a broader theme of 'emerging markets,'" she said. "I don’t mean BRICs, what I mean are emerging consumers of financial services, emerging consumers of wealth management services," whether those are women, millennials, or individuals in fast-growing countries, Krawcheck said.

"There are areas of the world that are growing, there are client segments that are growing, there are products that are growing. And then there are others that are flat. What have traditionally been drivers of the industry, a large cap growth mutual fund, for example, sold to what we view as a traditional client -- that path is probably not going to grow a lot."


Krawcheck said there’s been strong interest in her new fund since it launched on June 4.

“We’ve heard from institutional investors who are very interested in having discussions with us about this,” she said.

The fund also sparked interest with financial advisors, according to Krawcheck. Advisors interviewed shared her past reluctance to recommend values-based investments. There were even some who called the approach gimmicky. Krawcheck, on the other hand, said she spoke with advisors who were intrigued by the investment thesis and the portfolio’s holdings.

“These aren’t hippie-dippie companies,” she said.

Information on the fund's current holdings will be available June 30, 2014. The top five holdings of the fund's predecessor included Royal Bank of Canada, Statoil, BG Group, Woodside Petroleum and 3M co. The total expense ratio of the fund is .99% as of May 21.

Krawcheck explained previously that Pax World and her Ellevate Asset Management retooled an earlier version of a long-underperforming fund into a quantitatively determined index. She expressed confidence at a new and improved life for the fund, and the possibility of changing attitudes throughout the historically slow-to-respond industry.

“The industry’s a funny place,” she said.” Because it changes very slowly, up until it changes very quickly.”

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