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Impact investing describes an investment strategy that attempts to generate positive social and environmental effects along with financial gains. Impact investing can affect multiple avenues of issues, from addressing carbon emissions to providing more affordable housing for all. However, impact investing is also useful in benefitting marginalized communities, such as those who identify as LGBTQ. While historically the LGBTQ community has been reliant on it’s own community members to stimulate business, more activists and allies are getting involved in supporting investment returns that benefit the broader LGBTQ community. Impact investing provides an avenue for the community and its allies to put dollars directly into LGBTQ-run companies.
Few investments exclusively address LGBTQ factors, but are increasingly being considered in extensive ESG analyses. Additionally, funds that exclusively benefit the LGBTQ community do exist for investors who may be interested in them. For example, LGBTQ Loyalty Holdings, which is a diversity and inclusion-driven financial methodology and data company, launched the LGBTQ + ESG100 ETF earlier this year. One of the first funds designed to serve the principles and values of the LGBTQ community and its allies, and offers investors access to ‘U.S. large cap equity securities of companies that have demonstrated a commitment to LGBTQ diversity and inclusion (along with standard ESG compliance)’. It’s the perfect fund for those who wish to support the LGBTQ community through their investments.
Another way to ensure an investors portfolio is LGBTQ-friendly, however, is to conduct research about a companies’ stance on LGBTQ rights. Investors can either find information about a companies’ diversity data (and what steps they’re taking to improve diversity) or referencing the Corporate Equality Index to explore whether a company is meeting the needs of the LGBTQ community or if they still have progress to make. Regardless, there are many avenues investors can take in order to be more LGBTQ-friendly in their portfolios.
Investments in LGTBQ+ are growing. The LGBT-350 index outperformed its benchmark by 6.58% in 2020. A trend that is a continuation of steep growth over the last decade; the index has outperformed its benchmark every year since its launch in 2010. Revenue growth and cash flow returns at the companies in the broker’s LGBT-350 basket also tend to be stronger than at the remaining firms in the MSCI ACWI Index, according to the analysts. Basket members of the index were selected based on the presence of LGBTQ managers in senior positions or recognition as a top LGBTQ inclusive employer. Other LGBTQ indices — such as the LGBTQ100 ESG Index — have also outperformed their benchmark. These indices demonstrate some correlation between good performance and taking LGBTQ diversity into account and investors will continue to consider and increase the presense of LGBTQ empowerment within their portfolios.
At Physis, we can help investors align their portfolios with the social issues they would like to address. Join us today!