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Cheryl Smith
interviewed by Emma Taylor on November 10, 1995
"This fund is designed to emphasize the issues of women's advancement."
Cheryl Smith is the the manager of the Women's Equity Mutual Fund.
Tripod: Could you tell me about the philosophy behind a women's mutual fund?
CS: The reason that we need to have a fund that focuses on women is that women have not been making advances in the corporate workplace, and the arguments that were advanced fifteen or twenty years ago that there weren't enough talented women -- I think at this point we've had many many years of there being a number of talented women at middle management ranks, and they simply just have not been getting promoted. Sometimes people call it a glass ceiling, and this fund is designed to emphasize the issues of women's advancement, gender equity, equal pay for equal work -- by, a) selecting companies that are superior or better than average in these areas, and b) by working with those companies through corporate dialogue, to get the companies to be even better.
Tripod: Do you find that most of your investors are women?
CS: That's a very good question. I think that most of our investors are women, yes. We do have some men, but I would say the typical profile is a woman.
Tripod: Is that because men fear they might be sacrificing performance for ideology?
CS: We don't believe that the kind of social screens that are in place on this portfolio should materially affect investment performance. United States Trust Company, that I work for, has a long history of social investment management. Over the time since 1981, when we've been tracking socially related investment performance separately from investment performance without screens -- the results are virtually identical. Investment performance is affected by your investment style, it's affected by the kind of approach you take to the market, what kinds of industries you emphasize. But if a manager has a concentration in social investing, and does it on a regular basis, we don't think that it really affects the performance that you would see.
Tripod: What criteria do you use when selecting companies to invest in?
CS: Among the factors that we look for as being a positive factor of the social arena -- and of course, a company has to look attractive financially too, before it's in here -- what is viewed as a positive company is one that promotes women to top executive positions, and compensates them accordingly. So, in that we would be looking at the company's data on who their officers are, and what proportion of their officers are women. Second, a company that has a high percentage of women directors on the board, because we think that while having one woman director on the board is good, having more than one, two, three leads to more change. So, we're looking -- to the extent possible -- for companies that have a substantial number of women directors on the board.
Tripod: Can you give me some examples of companies that meet these criteria?
CS: Some companies that are particularly good in that area, let's see. Johnson and Johnson is one, for example. It has three women out of fifteen on the board. That may not seem like a high number, but in corporate circles it's a very high number! Federal National Mortgage Association has three women out of seventeen on the board.
Tripod: How can a women's mutual fund make a difference for women in the workplace?
CS: We do not look at it as the act of simply buying or not buying security, as being the major impact, although that has some impact. The major impact is through being in the market as a fund that is public and visible. Also, contacting the companies and saying, "We are interested in this issue of women's advancement and women's gender equity, and we are positively viewing you company, or, we're negatively viewing your company, because of this issue." By bringing up in dialogue with corporations what role they play in the advancement of women -- we have found over time with other social issues that that has an important effect on where companies go, and what companies do in terms of their policy.
We have a lot of other criteria -- we also look at the company's employment policies, we look at what kind of career development and training programs they have for women. Do they address work-family concerns? Do they present positive images of women in advertising, promotion and marketing? Are they accountable to their employees and to the communities they operate in? We have some negative characteristics that would prevent us from investing in a company. If they have a pattern of Equal Employment Opportunity Act violations, if they promote sexist stereotypes in the workplace in their advertising, if they market products that adversely affect women, or if they won't talk -- if they won't engage in dialogue on women's issues.
Tripod: If you had to choose one issue that is most important to women in the workplace today, what would it be?
CS: I think the issue of advancement of women in the workplace to senior positions, because I think that the rest of the issues flow from that one.
Tripod: You're obviously in a very male-dominated field. What obstacles have you faced, as a woman?
CS: Well I think there's the issue of a critical mass. There's the issue of going to an investment lunch, and being the only woman's face in the room, week after week after week after week after week. And that definitely has an effect. There's the issue of networking, and access to both formal and informal networks, that help promote and advance careers.
Tripod: Yeah, you can't really play racquet ball with the boys.
CS: Right, or golf -- that's another one. And by the same token, it's those informal networks that are seeming to be really important in terms of the advancement of women. That's why we think, not just having one woman on a board, but multiple women on a board. You don't begin to create networks when you have one isolated woman there in a company. What happens when you have only one, is that you have one woman fit into a very male-dominated management structure, and the only way of being an acceptable person in such an office is a male-defined way. By increasing the number of women in management, that can begin to change somewhat, and those informal networks that help advance careers and lead to promotions at increasing authority can begin to be developed.
Tripod: Are there any other women's mutual funds that you know of?
CS: There is another fund that was recently launched, and it's managed by two men.
Tripod: Of course.
CS: [laughs] There you go.
Tripod: How long has your mutual fund been around?
CS: This one has been in existence for two years, and I have been the manager of it since May of 95.
Tripod: Where did the idea come from, for a women's mutual fund?
CS: The idea came about through Linda Pei and Leslie Christian, who started Pro-Conscience Funds, for the purpose of creating a women's equity mutual fund, that was devoted to these issues. ... In Leslie Christian's experience, in a very male-dominated field, looking at what was going on, it became clear to her that one way to push for the issue was by starting a mutual fund. She became partners with Linda Pei, who is based in San Francisco, and stared this fund.
Tripod: What's the least somebody needs to invest in your fund?
CS: The least for a regular investment is a thousand dollar initial investment. If they're setting up an individual retirement account, the minimum is $500. It is a no-load fund, so they're not paying any broker's fee, so the whole investment goes to work.
Tripod: How can someone get more information about investing in the Women's Equity Mutual Fund?
CS: They can get information by calling (415) 296-9135. That is the number for Linda Pei at Pro-Conscience Funds, and that way they can talk to her more about what the fund is about, and get a prospectus.
If you'd like to know more about other mutual funds, and how you can get your foot in the door, check out theTripod Guide to Mutual Funds
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