Superannuation funds led by women, or with significant governance representation, out-perform "male-centric" funds by 50 basis points on average, according to Rainmaker SelectingSuper research.
Released to coincide with International Women's Day, the research was based on an analysis of FY2015 and calendar 2015 investment returns for 44 MySuper products offered by not-for-profit funds, representing $500 billion in total funds under management.
The analysis focused on these products to control for different investment strategies, fee mixes and corporate trustee structures; retail funds were excluded both because of their different management structures and because multiple super products tend to be overseen by a single trustee board.
The analysis created a "W-index" score, which was based on whether there was a female board chair (or co-chair) and female chief executive (or deputy chief executive) and the level of female representation on the trustee board and C-suite team.
Predictably, the W-index score was generally low, especially given that nearly half of all super fund members are women. According to the research, 37% of fund executives, 27% of fund trustees and 15% of chief and deputy chief executives are women. This represents an average W-index score of 23%.
If a fund scored above 30%, though, it was shown to both outperform by 50 basis points on average and "more consistently outperform," reflecting those funds beating the SelectingSuper MySuper market benchmark index in FY2015 in 12 of 16 cases, and in calendar 2015 in 10 out of 15 cases.
Conversely, funds with a low W-index were mixed regarding over and under-performance relative to the SelectingSuper benchmark.
Commenting on the research, Rainmaker SelectingSuper executive director of research Alex Dunnin said, "The research doesn't prove that super funds with high level of female influence in their leadership teams are objectively better, but it shows that they are more likely to out-perform.
"This reinforces the widely held view that management boards and executive teams with more diverse leadership are more likely to make better decisions, be more innovative and be more open to different ideas."
"SelectingSuper's research shows that women in the superannuation industry are highly skilled and the evidence tells us we should be hiring more of them. If there aren't enough women applying for these jobs we should as an industry be asking why and then doing all we can to train more women and recruit them to join the industry," said Dunnin.
For super fund members, Dunnin said the research is very useful because it shows that a strong indicator of a super fund's quality is the degree to which women are involved across its leadership team.
"While this may seem superficial, the subtlety is that because women who are not highly competent, unlike men in the same situation, are not likely to be working for long in a senior position at a super fund," he added.
The research serves another purpose as well. "It highlights how important it is for super funds to be transparent about who is on their trustee boards, who their executives are, what is their background and how are they appointed."