A company that invests their clients’ money into niche investment funds has created two new exchange-traded funds (ETFs) that specifically exclude LGBTI-friendly companies.
ETFs invest in specific groups of companies. For example, you can invest in ‘green’ ETFs that only invest in eco-supportive companies, or tech ETFs that only target tech companies.
Yesterday, Inspire Investing announced it had launched two ETFs aimed at conservative evangelical Christians.
The funds exclude any company ‘that has any degree of participation in activities that do not align with biblical values.’
This includes ‘the LGBT lifestyle’
It also excludes companies in any way involved with gambling, abortion, pornography and alcohol.
This is not the first time that ETFs have been created along ethical lines. A ‘Catholic Values’ ETF was launched in 2015 which excluded companies frowned upon by the United States Conference of Catholic Bishops. This includes stocks in defense-related businesses, but does not go as far as Inspire Investing next funds.
Talking to the Financial Times, Robert Netzly, chief executive of California-based Inspire said, ‘There’s huge demand for low-cost investing aligned with biblical values.
‘We love our neighbors in the LGBT community, but our investors want to invest according to conservative values.’
He said any company which takes a ‘take a hardline, activist line’ on gay rights, such as Apple or Starbucks, would be excluded.
‘This is out of step with mainstream America’
Mark Snyder, of LGBT advocacy organization Equality Federation, told FT he was skeptical of the success of the funds.
‘This is out of step with mainstream America, which has embraced non-discriminatory policies and fairness. When organizations and fringe activists have attempted to boycott organizations that support LGBT rights it has tended to be ineffective, so I think it probably won’t garner much interest.’
Two investment funds exist that specifically allow investors to put money into companies that support equality. In 2013, Credit Suisse launched an LGBT Equality Index (CSLGBT), allowing investors to put their money into companies that scored well on LGBT advocacy organization HRC’s Corporate Equality Index.
Pre-dating this, Denver Investments launched its Workplace Equality Index (EQLT) in 2001. It comprises of over 200 companies that support lesbian, gay, bisexual and transgender (LGBT) equality in the workplace. For the past three years the Workplace Equality Index has returned 9.83% per year versus the S&P 500 Index return of 8.87% per year.
John Roberts, Portfolio Manager at Denver Investments told GSN he was convinced that businesses that embrace LGBTI diversity and inclusion perform better, leaving potential slimmer pickings for indexes that target other S&P 500 companies.
‘I’m not sure of the makeup of the index that the Inspire Investing ETF will track, but it seems like they will be challenged. The Workplace Equality Index identifies 246 companies that have LGBT-inclusive workplace policies, that would most likely exclude them from the ETF you are inquiring about.
‘That leaves them with half the index to work with, and given that the companies with LGBT-inclusive workplace policies have a track record of outperforming the broad market, it seems like a high hurdle to get solid performance out of that subset.’
‘Better served stuffing money under the bed and hoping for the best’
Deena Fidas, Director of Workplace Equality Program at HRC, was even more blunt.
‘The most profitable companies have long embraced LGBT equality because quite simply it’s good for business,’ she told GSN. ‘A full majority of the Fortune 500 (82%) have LGBT-inclusive protections. Anyone thinking of investing in a retirement fund that excludes these and myriad other LGBT-friendly companies is probably better served stuffing money under the mattress and hoping for the best.’