LGBTQ+ ETF: Learnings for Indian ETF market
LGBT ETF is a unique way to get exposure to companies that are at the forefront of inclusive policies, an important factor in today's world
ETFs have been an integral part of some of the most successful portfolios because they provide stability and diversification. ETFs are an easy and cheap way to get exposure into a sector that would otherwise be difficult to invest in.
Today we wanted to dive into an ETF that truly reflects the modern values of the 21st century.
The LGBTQ ESG ETF tracks the LGBTQ100 ESG Index, which identifies the top 100 corporations that most align with the LGBTQ across America. It is the first ever index to incorporate the LGBTQ community survey data into their index creation methodology. Companies tracked in the index are the likes of Estee Lauder, Facebook, Starbucks, PayPal, Visa and more.
This ETF was launched by LGBTQ Loyalty Holdings earlier this month whereas the index was launched in November 2019. Between November 2019 and April 2021, the index generated a 43.8% return versus the S&P 500’s 37.7% return.
Why invest in companies that are LGBTQ and ESG friendly?
It is simple — the companies that adopt inclusive workplace policies are likely to attract the best talent across functions, which, by extension, means the companies perform better in the long run, thereby driving up stock prices. It’s a positive feedback loop. The new generation of millennial investors not only values the economic impact large companies can create, but also evaluates them based on their social footprint. Interestingly, these young investors are also the ones climbing the ranks at these top companies.
What is in it for Indian investors?
The nascent Indian ETF market can use the LGBTQ ETF as an example to widen its horizons and include ETFs with a direct correlation to socially inclusive policies.
Indian investors are now more globally aware than ever before and want to take advantage of a variety of opportunities that are made available to them, irrespective of the geographical location. Over the last couple of years we have seen more and more Indian investors diversifying their portfolios to include global investments in the post-pandemic world. The LGBT ETF is a unique way to get exposure to companies that are at the forefront of inclusive policies, an increasingly important factor in today’s world.
(The writer is CEO and co-founder at Vested Finance. Views expressed are personal)