Good morning! Michele Kang invests $25 million in women’s soccer, UConn wins NCAA championship, and women-led public companies are outperforming the tariff market crash—so far. – Down but not out. On Wednesday, Hypatia Capital released an analysis of its Women CEO ETF, an investable fund made up of U.S. public companies with female CEOs, from Jane Fraser’s Citi to Tricia Griffith’s Progressive. Over the last two chaotic months since President Donald Trump took office, the analysis found, businesses in the WCEO ETF had outperformed the broader market. While index benchmark ETFs dropped 6.2% in March, the WCEO ETF dropped only 4.9%.
Of course, later in the day on Wednesday, Trump gave his “Liberation Day” speech announcing the full scope of his tariff plan, sending markets into freefall. Thursday and Friday turned out to be the largest two-day wipeout of shareholder value ever recorded, according to Dow Jones. In total $11 trillion in value has been erased since Trump’s inauguration, with more than half of that disappearing last week. Hypatia Capital managing partner and chief investment officer Patricia Lizarraga went back to the drawing board and shared a new analysis with Fortune of women-led businesses’ stock performance through market close Friday.
On April 3, the S&P 600 fell 7.6% while the WCEO ETF fell 6.1%. By market close Friday, the WCEO ETF outperformed its benchmark by over 100 basis points. Hypatia conducted an industry-based analysis to determine whether the industries in its fund accounted for the difference—and determined that was not the reason why women-led businesses were outperforming the market.
The fund invests in all women-led public companies in the U.S. with at least a $500 million market cap. Lisa Su’s AMD is its top holding, followed by Jayshree Ullal’s Arista Networks and Revathi Advaithi’s Flex.
Lizarraga believes the 1.1% delta could be due to women-led companies’ likelihood of having more defensive balance sheets, lower debt-to-equity ratios, and higher cash reserves. In 2021, an article in the Journal of Behavioral and Experimental Finance found that female CEOs’ cash ratio was 18% higher than the mean among the top 1,500 publicly traded companies in the U.S. “In a down market, when investors may punish highly leveraged companies and reward stability and larger cash reserves, these traits may become a competitive advantage,” Lizarraga says. “The WCEO ETF, which includes a diverse range of companies from small-cap to mega-cap, may be benefiting from this prudence.”
When the startup and venture capital world entered its prolonged downturn in 2022 and focus shifted from growth to profitability, female founders found themselves better prepared; with less access to capital, many had long run their businesses more responsibly. The same now seems to be holding true for the largest women-led public companies in the U.S. After this morning’s market open, we’ll see whether this competitive advantage persists.
Emma [email protected]
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This story was originally featured on Fortune.com
