How to Build an LGBTQ-Friendly Investment Portfolio
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Not all investments are about the return. Many investors are just as interested in whether businesses are socially inclusive, and they want to put their money into companies that have policies and practices that support LGBTQ+ individuals.
Results suggest that such practices might actually improve returns. A 2021 Credit Suisse report found that a basket of 350 stocks for companies that implemented policies and practices that supported LGBTQ+ employees outperformed the broader equity market in 7 of the previous 11 years.
If you’d like your portfolio to focus more on companies that give back to the LGBTQ+ community, here are a few ways to start.
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Research more than companies' financials
Building a portfolio that speaks to your values requires you to scrutinize not only companies’ financial performance but also their practices that support certain communities and causes. Some of the few LGBTQ-focused exchange-traded funds that existed have quit trading since 2019, leaving the market bare of such vetted options for investors. But you can do your own research with the Corporate Equality Index.
Developed and administered by the Human Rights Campaign Foundation, the CEI is an annual report of companies’ performance in key metrics contributing to LGBTQ+ equality within their workplace. The index rates businesses' inclusivity practices, including nondiscrimination policies, equitable LGBTQ+ benefits and inclusive culture and corporate social responsibility.
In its 2022 report, the CEI reviewed the policies, practices and benefits of 1,217 companies, giving 842 businesses the top rating for LGBTQ-friendly practices. Using the CEI’s report, you can evaluate a company’s inclusiveness and support of LGBTQ+ communities before investing in ETFs or mutual funds they’re a part of.
You can also research companies’ LGBTQ+ practices on your own. Some companies post related information on their websites to inform consumers of their business practices, while others have been featured in news stories because of their LGBTQ+ policies. A quick Google search can update you on certain companies’ potential role in your future portfolio. Start with companies you like and those you’ve heard have a known relationship with the LGBTQ+ community.
Work with a financial planner
A financial advisor can help you align your investments with your goals and your values, and some advisors are more experienced with LGBTQ+ issues.
If you’re looking for guidance on how to develop your portfolio, look for financial advisors that advertise they work with members of the LGTBQ+ community. They likely also are aware of how to invest in businesses’ that support the community as well.
Be prepared to ask specific questions to understand how well informed they are and what they can do for someone who is wanting to support the LGBTQ+ community through investments. Ask what options you have available to create an LGBTQ+ portfolio and how the team goes about vetting companies or funds to ensure they meet your criteria.
You can also look for a financial advisor with the Accredited Domestic Partnership Advisors (ADPA) designation from the College for Financial Planning. These advisors must complete coursework and pass a test on LGBT-related issues, including wealth transfers, taxes and end-of-life needs for domestic partners.
The following sites' free, searchable directories can help you find a nearby financial planner.
College for Financial Planning (select the ADPA designation from the drop-down menu)
National Association of Personal Financial Advisors (select “LGBT Couples and Families” from the filter menu in the top right)
XY Planning Network (select “Gender/Identity Focus” from Advisor Specialities menu)
Make sure you understand how your financial planner is compensated and whether they abide by the fiduciary standard, a requirement that any advice you receive must be in your best interest. This means your financial advisor will help guide your investments to meet your goals instead of his own.
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