A guide to rainbow friendly investing
Interested in building an LGBTQ+ inclusive investment portfolio? Check out some of the rainbow friendly companies and funds below!
The finance and investing world hasn't always been so inclusive (and it still has a way to come) but as the importance of LGBTQ+ inclusivity increases, so have the investment options that focus on companies with lesbian, gay, bisexual, transgender, and queer-inclusive policies and practices. So if you’re interested in building an LGBTQ+ friendly investment portfolio, it’s never been easier than today.
Our aim here is to help bring awareness to some of the ways you might be able to achieve this, with the hope of getting Kiwis creative juices flowing - inspire thoughts around how you might build out your portfolio to become more LGBTA+ inclusive. So without further adjure, here are some rainbow friendly companies and funds for you to check out!
LGBTQ+ friendly companies you can invest in directly
Whilst we are firm believers that the best way to build a diversified portfolio is through passive investing (yes, we are a little biased), we know some of you might prefer other forms of investing (I.e. active) and so it's at the very least worth mentioning some individual companies for those of you who are interested.
The Human Rights Campaign's annual Corporate Equality Index (CEI) is a great way to find out about a company’s internal LGBTQ+ policy and practices. Each company’s policy is reviewed and then an overall score out of 100 is given. The score is based on non-discriminatory gender policies, benefits, practices, social responsibility and more.
To earn top ratings, a company must have taken steps to establish and implement comprehensive policies, benefits, and practices that ensure greater outcomes for members of the LGBTQ community.
For example, the most recent 2022 report shows that 8 out of the 10 largest Fortune 500 companies achieved 100% ratings, including:
- Walmart (WMT)
- Amazon (AMZN)
- Apple (AAPL)
- CVS Health Corp. (CVS)
- UnitedHealth Group (UNH)
- McKesson (MCK)
- AT&T Inc. (T)
- AmerisourceBergen Corp. (ABC)
Check out the full report and list of companies here.
Please note that although you might’ve heard of some of these recognisable companies, their inclusion here isn’t an endorsement to invest in them. This is more just our way of helping better educate kiwis and give you an idea of some of the companies out there before making your own (thoroughly researched) investment decisions.
LGBTQ+ focused indices, mutual funds, and ETF’s
Before we dive into this one, here’s a quick refresh on the financial terminology: Index Funds and ETFs are very similar and are investments that track an index, sector, commodity, or other types of asset (e.g. The Vanguard S&P 500 ETF). So instead of investing in one individual company (like we’ve listed in the section above), you’re investing in a whole bunch of them.
Now on to the list! Here are some LGBTQ+ friendly indexes and ETF’s. Each fund varies in the types of companies/industries they invest in, so before you make any investment decisions you should do your own research. But we hope this list serves as a handy starting point:
- The LGBTQ100 index from ‘LGBTQ Loyalty’ | Comprises of the top 100 hundred LGBTQ+ focused U.S. publicly traded companies
- SPDR SSGA Gender Diversity Index ETF (SHE) | Seeks to provide exposure to US companies that demonstrate greater gender diversity within senior leadership than other firms in their sector
- iShares MSCI KLD 400 Social ETF (DSI) | Seeks to track the investment results of an index composed of U.S. companies that have positive environmental, social and governance characteristics as identified by the index provider
- Vanguard FTSE Social Index Fund Admiral (VFTAX) | Excludes certain companies that have violations of labor rights, human rights, anti-corruption, environmental standards, and companies that do not meet certain diversity criteria
We strongly suggest you do your own research before looking to invest in these funds. These are not recommendations, they have only been screened for their social and LGBTQ+ impacts, no other considerations have been taken into account I.e fees, quality manager, returns.
The positive impact of LGBTQ+ inclusive policies within companies
So are these LGBTQ+ inclusive policies all they’re cracked up to be? That will depend on each individual business and how they implement and follow their policy, however if recent studies are anything to go by, things look positive.
Studies have shown that LGBTQ+ inclusive practices have a positive impact on a business's ability to attract and retain employees and can lead to increased profitability. Employees are also helping to drive this positive change, with a 2017 Deloitte survey finding that 80% of respondents said inclusion plays an important part in choosing an employer, and 72% would consider leaving an organization for one that is more inclusive.
While we won’t dive into market performance of companies and funds that are LGBTQ+ friendly (because performance can depend on a range of internal and external factors), we will say that a common trend is that both LGBTQ+ inclusive policies and financial factors can help play a positive role in the overall health of a company.
If building an LGBTQ+ friendly investment portfolio is something you’d like to do, then we’d recommend doing your own research on each company and/or fund before making any investment decisions.
Please note none of this should be deemed as financial advice and we strongly suggest you do your own research. These are not recommendations.
