There are a lot of things to consider when working out how to start investing. You can be forgiven for not considering what your investments might mean for the LGBT+ community. Pride Month brings the LGBT+ community into the spotlight each June, making it a good time to consider investing with the community in mind.
Here are some pointers on how to invest with an LGBT+ lens.
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Using an LGBT+ lens
Environmental, social and governance (ESG) investing – sometimes referred to as sustainable or ethical investing – is on the rise.
At its simplest, an LGBT+ lens is just another form of ESG investing, focusing on the social aspect.
The idea of applying an LGBT+ lens to your portfolio is to advocate for better inclusion and treatment of the queer community by investing in companies that actively support these individuals. This can be through their products or services or their diversity and inclusion policies for employees.
How to invest with an LGBT+ lens
Deciding how to invest with an LGBT+ lens may seem complicated, but it doesn’t have to be. All it really takes is a bit of research.
When choosing investments, you just have to ask one extra question. Does this company actively support the LGBT+ community through its products and services and within its workforce?
There’s plenty of information online about companies’ stances on LGBT+ rights. Many companies now also report their diversity data each year. This will often include the steps they take to improve diversity within their organisation.
If you’re already investing, take a look at your existing portfolio. Do you think your investments support the LGBT+ community? If the answer is no, you might need to make some changes to your investments if you want to invest with an LGBT+ lens.
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How to start building an LGBT+ friendly portfolio
Building your portfolio is a key part of the investment process. How you build your portfolio will determine whether it is LGBT+ friendly or not.
You can build an LGBT+ friendly portfolio on your preferred platform. If you’re not sure which to use, this guide might help.
The steps you need to take will vary depending on whether you want to invest in funds or individual companies.
Investing in funds
There are specific funds that focus on social issues, although they may not all actively screen for LGBT+ policies.
This means it can be worth looking at the individual companies a fund invests in. That way you can make sure they all fit in with your values and ideals.
Large investment houses, like Blackrock, Vanguard and iShares, now have social and diversity and inclusion-focused funds you can invest in. This pool is growing quickly, so your choice should only increase with time.
Investing in companies
When choosing companies to invest in that support the LGBT+ community, the Corporate Equality Index can be a good place to start. It provides insights into whether a company is meeting the needs of the LGBT+ community or if they still have work to do.
It also leaves you with a lot of options. Of the 1,059 companies included in the 2020 index, more than 600 companies received a top score of 100 for their commitment to LGBT equality. It is worth noting that this is a US-focused site, so not all UK companies are included in the index.
Some well-known companies, like Microsoft and Apple, have high ratings and are known for their strong inclusion policies. However, there are many other companies that also perform well, so it’s worth looking at a range.
Other things to consider
Investing with an LGBT+ lens might be a good thing for your portfolio. In 2020, the LGBTQ-350 outperformed its benchmark, the MSCI All Country World Index, by 6.58% – returning 21.14% compared with 14.29%.
Of course, it wasn’t necessarily the companies’ LGBT+ policies that made the index outperform the benchmark. But, given the index has outperformed its benchmark every year since 2010, it is something to consider.
If you want to know more about how to invest, check out this guide on investing for beginners.
This investment calculator might give you some extra motivation to get started. Find out what your returns could look like.
