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Put Your Money Where It Counts: How to Invest in LGBTQ+-Friendly Companies

Put Your Money Where It Counts: How to Invest in LGBTQ+-Friendly Companies

October 06, 2021
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Investing in something should make you feel good. It should instill a feeling of excitement, hope and pride. But what if you’re investing in something that’s not aligned with your true core? How can you feel good knowing you’re involved in companies that promote more dissonance, inequality, and maybe even hatred? As a woman, I can’t feel good if I’m behind the scenes supporting unequal pay, or companies with very little gender diversity. It seems self-limiting, and the ultimate reinforcer of the glass ceiling. Luckily it doesn’t have to be this way. I’m not forced to use my money to support these companies as there are ways around it.

So what about investing in companies that are LGBTQ+ friendly? If I could find a way for you to invest only in companies that have inclusive workplace policies and practices for LGBTQ+ identifying people, would you do it? My best guess tells me yes, you would be on board with that, especially if you’re part of this community. It’s not uncommon to hesitate when screening your investments due to a fear that you might miss out on the same growth as you might get in other investments. Okay- that’s a legitimate concern, but fortunately it turns out that by and large these companies have been successful and outperformed the stock market average!

A recent report from investment bank Credit Suisse has shown their LGBTQ-350 Index, a list of companies that either have an openly lesbian, gay, bisexual or transgender senior manager and/or are voted LGBTQ+ inclusive employers in leading surveys, shows that since the start of 2010 the LGBTQ-350 Index has beat that of the S&P 500 by 378 basis point per year (that’s 3.78%) which is an average annual return of 9.1%.1 In 2020 alone, the LGBTQ-350 Index outperformed its benchmark (the MSCI All Country World Index) by 6.58% with a return of 21.14%.2

That sounds very alluring, doesn’t it? Let’s put a little perspective on that. A noted reasoning for the outperformance is that 5% - 10% of the population identifies as LGBTQ+, which makes this group the world’s number three or four economy. 1 With such large financial backing it makes sense that their patronage culminates into larger profits. It’s also likely due to corporate America’s growth in terms of LGBTQ+ equality. In 2021 there are 767 companies that rate 100% in terms of LGTQ+ equality, and they employ 13 million people.2 That significant increase in qualified companies means the pool of available stocks is growing, too, which means it can include more of the high-performers. It has also been shown that LGBTQ+ friendly policies and practices strengthen shareholder returns.A McKinsey study found companies most lacking in gender and cultural diversity lagged by 29% in their likelihood of achieving above-average earnings. 2 I’ve mentioned this in a past blog post about how diverse workplaces have been found to promote less “group-think” and therefore greater creativity and innovation as well as more company resilience. 3 Lastly, another factor could simply be because the list is mostly made up of US companies with the top 5 on the list being the stock market’s big tech winners- Apple, Microsoft, Google, Amazon and Facebook. 1

My reasoning for writing this post is not to incentivize you to buy LGBTQ+-Friendly investments because you want to make a larger profit. It’s more to show you that there’s a way you can feel good about investing, and yes, hopefully at the same time you make some money! I mean, that is the main objective, right?

Note that in addition to the Credit Suisse LGBTQ-350, you can follow The Human Rights Campaign's annual Corporate Equality Index (CEI) as well as the LGBTQ Loyalty indices for LGBT-friendly investments. The Human Rights Campaign’s Corporate Equality Index tracks company’s LGBTQ+ policies and scores them based on a scale of 100 with criteria that looks at nondiscrimination gender policies, spousal medical benefits, training and best practices, and corporate social responsibility. The two indices created by LGBTQ Loyalty are a U.S. Loyalty Preference Index called the LGBTQ100 ESG Index and the LGBTQ100 Index, both of which align with their mission to be committed to protecting and celebrating LGBTQ individuals, as well as members of other marginalized communities, beginning in the workplace. 4

 

 1 Goldstein, Steve. LGBT-Friendly Companies Outperform in the Stock Market, Credit Suisse Says. Marketwatch.com. 1 Dec. 2020.

2Guide to Finance for LGBTQ+ People. Investopedia. 4 Oct 2021.

3Invest in Women- The Gender Pay Gap: Why Should Investors and Clients Care? Panel Discussion. Financial Advisor Magazine. 18 August 2020.

4LGBTQ Loyalty website. 5 Oct 2021.

Carrie Waters Schmidt is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Equanimity Wealth Planning and Investing is a marketing name for registered representatives of Lincoln Financial Advisors.    CRN-3853067-100521