On a chilly Thursday afternoon last month, several dozen women gathered at the Flywheel Sports spinning studio in Manhattan's Chelsea neighborhood, donned tights and sneakers, and started pedaling.

Just your ordinary pre-weekend exercise class, right? Wrong.

The women were part of a growing collection of financial professionals called Women in ETFs, an industry group for 2,700 members who work in the exchange-traded fund industry. The event was a charity spin in support of Save the Children and involved satellite gatherings in Boston, Chicago and Washington. All told they raised over $5,000.

Beyond charitable fundraising, cycling offers an apt metaphor for the group. After all, its members are constantly pedaling for equal opportunities for women in finance, traditionally a male-dominated industry.

Today, just one in five investment funds globally is run by a woman, a rate that's remained virtually unchanged since 2008, according to a study by Morningstar. However, progress has been made in passive investing, where ETFs reside. Morningstar found that when women do get fund manager positions, odds are it will be for a passive product rather than active.

The trend goes back to the start of the ETF industry in the early 1990s.

"Back then, the ETF business wasn't considered sexy and people had questions about the viability," said Marie Chandoha, president and chief executive officer of Charles Schwab Investment Management, the firm's second female CEO. "This wasn't necessarily the sphere that men flocked into. So women were able to make it on the ground floor and grow in ranks."

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In the U.S, just 10% of fund managers are women, the second-lowest inclusion rate among large global markets, according to Morningstar.

PASSIVE AGGRESSION
The odds of women running a passive fund compared with an active fund are 1.36 to 1, according to Morningstar's Madison Sargis and Laura Pavlenko Lutton, who were the first to break down the global data of more than 25,000 fund managers in 56 countries by gender. The chances of women running passive funds are rising faster than the industry's growth rate, the study's authors wrote.

This turns out to be good news for women, as about $1 trillion in assets shifted to passive products from active last year alone with investors on the hunt for lower costs. Indeed, the market share for passive investing strategies is expected to surpass active by 2024, according to a study by Moody's Investors Service in February.

Running a passive fund isn't as simple as just tracking an index. Managers are constantly adjusting their allocations to ensure their portfolios are positioned to match their long-term goals. In addition, some ETFs don't track the full index they follow, leaving the managers to select which securities are most appropriate to include.

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"This wasn't necessarily the sphere that men flocked into. So women were able to make it on the ground floor and grow in ranks," said Marie Chandoha, CEO of Charles Schwab Investment Management.

CHANGING THE CULTURE
So what makes ETFs more female-inclusive?

"There is something different about the ETF world," said Deborah Fuhr, managing partner at the research firm ETFGI and a co-founder of Women in ETFs. "It is as competitive as other financial industries, but there is also room for partnership, mentoring and helping each other out."

When Fuhr started looking into ETFs at Morgan Stanley there were 21 funds available, as most firms were just starting to launch their product suites. The women who began in the industry at the same time as Fuhr stayed, and as the industry grew so did their careers.

Still, there's room for improvement, as women remain severely underrepresented as fund managers.

"It's hard to change the culture, and it takes senior-level executives to do that," said Jill Mavro, who helps oversee the distribution of ETFs as the head of the Strategic Relationship Group at State Street Global Advisers.

A statue of a defiant girl stands facing the Charging Bull sculpture in the Financial District of New York. State Street Global Advisors installed the bronze statue in front of Wall Street's iconic bull as part of its new campaign to pressure companies to add more women to their boards.  (Bloomberg News)
A statue of a defiant girl stands facing the Charging Bull sculpture in the Financial District of New York. State Street Global Advisors installed the bronze statue in front of Wall Street's iconic bull as part of its new campaign to pressure companies to add more women to their boards. (Bloomberg News)

SPREAD THE WORD
Finance firms are already taking steps to try to level the playing field.

Virtually every job posting at State Street goes through software that detects words that are more likely to attract one gender over another, helping recruiters use more gender-neutral language. About 80% of ETFs in Charles Schwab Investment Management are run by women, and a similar portion of the firm's mutual funds is managed by females. Three out of seven members of BlackRock's ETF and index business management committee are women.

But in the broader investment industry there's still a lot of work to be done. Studies show that women represent between 15% and 20% of the workforce in finance. In the U.S, just 10% of fund managers are women, the second-lowest inclusion rate among large global markets, the Morningstar study showed. By comparison, women make up 36% of lawyers and 33% of doctors in the U.S.

"Any one of us who is in a privileged position to educate hopefully has the desire and tools to do so," said Rachel Lord, the head of BlackRock's iShares in Europe, the Middle East and Africa. "It's a societal duty."

A group called Girls Who Invest also tries to spread the word. The non-profit founded by Seema Hingorani, a former chief executive officer for the New York City Retirement Systems who currently works as senior adviser at private equity firm Crestview Partners, provides financial training for female students and helps them get jobs. This summer, one of the Girls Who Invest students will intern at Charles Schwab Investment Management.

'THE FEARLESS GIRL'
Wall Street's changing in symbolic ways too.

On March 7, the iconic bronze statue of a bull in Lower Manhattan welcomed a new neighbor a few feet away: a sculpture of a young girl, hands on her hips and head up staring directly at the charging animal. Called "The Fearless Girl," it was placed there by State Street on the eve of International Women's Day as a call for more women to serve on corporate boards, and it will remain in its spot for a month.

The Women in ETFs group also rang the bells at the 43 stock exchanges around the world on March 7 and 8 as an additional nod to International Women's Day.

"Diverse opinions matter, deep pools of talent matter," said Linda Zhang, founder of Purview Investments and a co-founder of Women in ETFs, at a bell-ringing event in New York. "It's easy to say important words once a year and never follow up. We must challenge everyone of us to make 2017 a year that made a difference."

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