On the eve of International Women’s Day last Tuesday, State Street Global Advisors, which manages some $2.5 trillion in assets, signaled its solidarity with the day’s demonstrators. The company installed a roughly 50-inch-tall bronze statue of a defiant girl in front of Wall Street's iconic charging-bull statue. The reaction to the statue, which was designed by artist Kristen Visbal, was immediate and powerful.
The statue is a powerful symbol, but there is also substance behind it. Fearless Girl is part of State Street’s campaign to pressure companies to add more women to their boards. The firm followed up the installation with a letter to the thousands of companies that can comprise the Russell 3000 index on Tuesday asking them to take action to increase the diversity on their boards. There is room for improvement: State Street says that roughly a quarter of the 3,500 companies it sent letters to have no women on their boards.
There’s an irony to this. The fund managers at State Street don’t pick stocks. As such, State Street is what’s known as a “passive” manager, meaning that all its various funds track the performance of indexes. As a result, its managers don’t have the ability to choose not to invest in a particular company: They do as the index dictates. In recent years, as more and more money has gone into passive funds, there’s been a burgeoning worry that it is undermining the power that investors have to shape society; one widely circulated report put out by the money-management firm Sanford Bernstein was titled “The Silent Road to Serfdom: Why Passive Investing Is Worse Than Marxism.” (Sanford Bernstein, of course, is an “active” manager.)