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Investing for Equality: Aligning Financial Returns with LGBTQ+ Support
In the investment world, seeking lucrative returns has always been the main aim. However, in the contemporary landscape, more and more investors are opting to select their assets not just based on potential returns, but also on the alignment with their core values, one such being support for the LGBTQ+ community. Jonathan Lovitz, the Senior Vice President of the National LGBT Chamber of Commerce (NGLCC), holds that investments in firms that uphold the LGBTQ+ community yield more than just financial gains. They also promote prosperity, opportunities, and the prospect of the American Dream for all citizens. By selecting investments that champion equality, you're contributing to both small businesses and corporations that are doing their part in this significant battle for equality. In this article, we'll explore how you can fine-tune your investment strategies to support the LGBTQ+ community while meeting your financial objectives.
Identifying LGBTQ+ Supportive Investments
Your journey to finding investments that bolster the LGBT community can start with the Corporate Equality Index by the Human Rights Campaign. Jay Lipman, president and sustainable asset manager at Ethic, believes that the index provides a comprehensive overview of whether companies are catering to the needs of the LGBTQIA+ community through effective workplace policies.
The index recognizes companies that establish policies meeting the needs of LGBTQ+ employees. Such policies include explicit non-discrimination rules for sexual orientation and gender identity, benefits for domestic partners, transgender-inclusive benefits, and non-discrimination norms for suppliers and contractors, among others.
The 2022 index included a record-breaking 842 companies that scored a perfect 100% for their dedication to LGBTQ+ equality. Meghan Lape-Lafevre, a certified financial planner and the founder and COO of Conscious Impact Financial Planning, suggests that this list is an excellent base for novice investors. Experienced investors can use it to affirm existing socially responsible investments in their portfolio.
Lape-Lafevre also suggests the use of tools like YourStake for investors with holdings managed by a financial advisor. YourStake is a tool for financial professionals that can assess investment portfolios against over 50 social responsibility factors.
Once you've identified a shortlist of potential investments, delve deeper into each company’s official website. Information about policies and inclusivity efforts can usually be found in the company's career or culture section. Websites like Glassdoor.com can provide reviews from current and past employees of a company, further illuminating a company’s commitment to inclusivity.
Spotlight on LGBTQ+ Friendly Corporations
Prominent U.S. large-cap companies with strong ratings on the Human Rights Campaign’s Corporate Equality Index include well-known names like Walmart, Amazon.com Inc, and Apple Inc. Other corporations of interest are JPMorgan Chase, Alphabet, and Verizon Communications Inc. This isn't an endorsement to invest in these companies, but it's meant to stimulate thinking about other companies you might want to explore.
LGBTQ+ Supportive Mutual Funds and ETFs
When it comes to portfolio diversification, Meghan Lape-Lafevre leans towards ETFs. By paying a maintenance fee, you entrust a professional with the responsibility of selection, diversification, and rebalancing within a specific sector or target outcome. Here are a few funds you might consider for socially responsible, LGBTQ-friendly investments:
- Vanguard FTSE Social Index Fund (VFTAX); expense ratio: 0.12%
- Change Finance US Large Cap Fossil Fuel-Free ETF (CHGX); expense ratio: 0.49%
- iShares MSCI KLD 400 Social ETF (DSI); expense ratio: 0.25%
- Vanguard ESG U.S. Stock
- ETF (ESGV); expense ratio: 0.09%
- SPDR SSGA Gender Diversity Index ETF (SHE); expense ratio: 0.20%.
While not exclusively committed to LGBTQ+, these funds endorse gender diversity and other crucial parameters of socially responsible investing (SRI), with an emphasis on LGBTQ+ inclusivity.
For those seeking automated aid in selecting LGBTQ+ friendly investments, some robo-advisors also market their portfolios as adhering to SRI guidelines, such as Betterment, Ellevest, and Wealthfront.
Performance of LGBTQ+ Investments
A study conducted by McKinsey shows that initiatives for diversity and inclusion yield significant returns for companies that invest in them. The 2019 report found that companies in the top quartile for gender diversity and cultural diversity were 25% and 36% more likely to experience higher profitability than their fourth quartile counterparts.
Thus, companies investing in cultural diversity, including LGBTQ-inclusive policies, appear to have a higher chance of outperforming their less inclusive peers. However, investors should exercise caution before drawing conclusions.
Pierce Crosby, general manager of TradingView, points out that it's not advisable to equate company policies directly with investment performance, but he also notes that top-performing companies often have strong LGBTQ-friendly policies in place. Factors like employee satisfaction and a company's ability to attract and keep top-tier talent can enhance company performance and profitability.
Even so, it's important to remember that having SRI designation or listing is not a guarantee of the company's overall health. A deeper research is needed to evaluate the business's performance and potential.
Initiating Investment in LGBTQ+ Friendly Assets
Starting your investment journey involves determining where you'll be holding your investments. For purchasing stocks, mutual funds, and ETFs, you'll need a brokerage account through an online brokerage or your financial advisor. Alternatively, you could use a robo-advisor that offers investment portfolios that match your LGBTQ+ investment goals. Additionally, you may find LGBT-friendly investments through your company-sponsored retirement plan.
Finding an LBGTQ+ Friendly Financial Advisor
Sometimes, having a financial advisor who understands your identity and the intersection of your identity and finances can be incredibly beneficial. If you're interested in finding an LGBTQ-friendly financial advisor, you can:
- Check out your local NGLCC affiliate Chamber of Commerce, which will have member financial advisors.
- Look for advisors with an Accredited Domestic Partnership Advisor (ADPA) certification from the College of Financial Planning, as this requires additional coursework in LGBTQ-specific financial issues.
- Use resources like the Gay and Lesbian Directory or Guidevine, which includes a category for financial advisors for the LGBTQ+ community.
Conclusion
Investing isn't just about earning returns anymore. It's about making a meaningful impact that aligns with your personal values. For supporters of the LGBTQ+ community, this means investing in companies and funds that foster equality, inclusivity, and diversity. Leveraging resources like the Corporate Equality Index, robo-advisors, and LGBTQ+ friendly financial advisors can aid in navigating this investment path.
Remember, it's not just about checking boxes for social responsibility, but it's equally important to perform due diligence and comprehensive research on potential investments. This way, you're not only supporting an essential cause but also building a portfolio that is financially resilient. In the end, socially responsible investing allows you to do good while also doing well for yourself, contributing to a future where everyone is treated equally and respectfully.
