How to craft an investment portfolio that promotes LGBTQ+ equality
Nearly half of U.S. investors are looking for opportunities to invest in ways that promote LGBTQ+ equity and inclusion, a 2023 Morgan Stanley survey found. Yet a year after that Pride Month data was released there remain very few investment options that focus purely on LGBTQ+ equity.
The demand for these products, not surprisingly, is highest among among LGBTQ+ investors and heterosexual investors who have an LGBTQ+ household member. But two-thirds of all Gen Z investors and 56% of Millennials also think they should have more options in the space.
That suggests LGBTQ+ investing opportunities should grow as these younger generations become a bigger force through increased earnings and inheritances, even if the capital is not there today.
“Investing with LGBTQ+ objectives describes the effort to direct investment capital toward the advancement of populations historically disadvantaged based on their sexual orientation or gender identity,” says Susan Reid, Morgan Stanley’s global head of talent and director of the Institute for Inclusion. “The goal is to advance equitable and inclusive opportunities for the LGBTQ+ community, while also delivering market-rate financial returns.”
For investors hoping to build an LGBTQ+ equitable portfolio the first place to start is with the Corporate Equality Index, produced by the Human Rights Campaign Foundation. It is the go-to report for rating workplaces on lesbian, gay, bisexual, transgender and queer equality.
The 2023-24 Corporate Equality Index found 545 businesses that earned all 100 points and HRCs 2023-2024 “Equality 100 Award” as a leader in LGBTQ+. Here are the only 5 companies that topped the rankings across five measures from five countries in the Americas.
Investopedia highlighted 5 U.S. companies drawn from the 2023-24 list with high scores in nondiscrimination gender policies, spousal medical benefits, training, best practices and corporate social responsibility, among other factors:
Investopedia also suggest investors do their own research by reviewing company websites, which may offer insight into their diversity and inclusion practices. These are often found on the “careers” or “culture” pages. You can also check ratings on Glassdoor.com, where employees and former employees post more true-life reviews.
The LGBTQ100 index fund was one of the few pure LGBTQ+ options, but the index and the fund that tracked it were liquidated in 2022. Among the U.S. publicly traded companies with the most advanced ESG policies that it identified at the time were Mastercard MA , Visa , Tesla TSLA and Coca-Cola KO as well as Amazon.
You can also look to more broadly based socially responsible investments. Most ESG screens include criteria on diversity and inclusion and many specifically include LGBTQ+ rights in their evaluations. Forbes suggests researching these funds as a potential base:
- Vanguard FTSE Social Index Fund ; 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 some of the funds listed above aren’t exclusively committed to LGBTQ+, they all promote gender diversity and other criteria tracked for socially responsible investing with an eye toward LGBTQ+ inclusion, Forbes points out.
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