Morgan Stanley has created a new "parity portfolio" that includes only companies with three or more women on their boards of directors.

"Research… shows that companies with significant female representation on boards and in senior leadership have stronger financials (return to shareholders, return on assets, return on equity, profit margins) than those that lack gender diversity in leadership," says the firm’s press packet.

But just a minute:

While it is fine for Morgan Stanley to create a fund that appeals to socially conscious customers, it is misleading to sell it in terms of investment performance.

So writes Christina Hoff Sommers in an Atlantic article. Hoff Sommers argues that the financial benefits of putting women on boards are being oversold. Several studies are cited to bolster the notion that board women increase the bottom line. Hoff Sommers debunks this and also has studies to cite. But I found this particularly convincing:  

The richest source of empirical experience is from Norway, which in 2003 required that all publicly listed companies promptly move to 40 percent women directors or be liquidated. That worked. Female board membership soared from nine percent in 2003 to 40 percent today. But, as a 2011 University of Michigan study concluded, Norwegian firms suffered a decline in value: "The quota led to younger and less experienced boards…and a deterioration in operating performance." So far, the program has done little to increase the number of Norwegian women in upper management. What it has done is greatly enrich about 70 much-sought-after women who now hold more than 300 board seats. Critics refer to them derisively as the Golden Skirts or the Old Girls Club.

Hoff Sommers concludes:

The campaign to include more women on corporate boards is well intentioned. Gender diversity in corporate oversight is an important desideratum. But business and financial leaders are supposed to be—we depend on them to be—coolly objective and focused on economic reality. When they stray into cherry-picked research and quota-based metrics, they sow confusion and invite trouble. Morgan Stanley, for instance, depends on investors' confidence that it is a smart, high-return company. But it flunks its own test of investment-worthiness: Its 14-person board of directors has only two women.

Read the entire article.