In a new study on gender diversity, Credit Suisse analysts found that investors focusing on companies where gender diversity was an important strategy were rewarded with higher return.

After reviewing 3,400 large companies around the world across all industries, the analysts found excess compound returns of 3.5% per year since 2005 in companies with women on the board compared to companies where the boardroom is entirely male.

This supported the firm’s 2014 study, which found that gender diversity in senior roles was linked to excess stock market returns along with higher corporate profits.

Increase in female representation but off of small base

There has been a 16% increase in female representation on boards since the survey was last conducted in 2014. This marks progress toward more diversity, but notably it’s off of a low base.

“The starting point is a low one and the pattern of improvement uneven,” Credit Suisse’s Julia Dawson wrote. “Substantial female representation is still a mark of differentiation rather than the norm.”

Women currently occupy just 14.7% of board seats, marking a 54% increase since 2010. However, the report added that the positive trend does not carry over to the participation of women in senior management.

“Whereas the female ‘overboarding’ seen in the US and European boardrooms enabled rapid achievement of diversity targets, it also tends to reduce the pool of women available for senior management roles,” the report said. “This is particularly important as female CEOs—in our sample, these represent a mere 3.9%—often promote women and help shape the much needed talent pipeline.”

In the study, there are 61 companies where women account for 50% and above of senior management. The “50% club” is clustered in consumer discretionary (the majority which is apparel and and luxury goods) and financials (the majority of which are real estate companies), as seen below.

Those with a higher percentage of women have performed better over time, according to the study.

Better returns for less risk

“Lower leverage, higher payouts and higher return on capital employed lend support to the idea that diversity implies better returns for lower risk,” according to the report.

Continued recognition of these financial benefits—in addition to social ones—has encouraged improvement in board rooms, particularly in Europe, which has seen an 80% increase in female boardroom positions in the last six years, helped by new quotas.

“The 24.4% representation of women in European boardroom today is of course a significant positive, a long overdue recognition of the benefits that diversity in its many guises brings to the decision-making process and stewardship of companies,” according to the report.

Credit Suisse researchers say this is an encouraging data point that they see the US following in years to come.

“Given that women have been appointed with relative ease in Europe, it must give us confidence that further progress will be made globally,” they wrote in the report.