Investors who want their portfolios to reflect racial and ethnic diversity choices do not have many options. There are only about two dozen U.S. funds that have a diversity mandate and of those seven are focused solely on gender, Morningstar data show.

That leaves just five pure play investments. Morningstar analysts profiled those five funds for the start of Black History Month, which runs through February, in an article by Alyssa Stankiewicz, an associate director of parent research for Morningstar.

At least part of the reason for the lack of diversity options is the lack of diversity within the asset management space, Stankiewicz pointed out. While Blacks comprise nearly 13% of the U.S. population they represent less than 2% of portfolio managers on average. For more, download Morningstar’s first survey-driven Diversity in Asset Management report.

Two of the funds on the list are fixed-income offerings that take a slightly different approach than the three equity funds, Stankiewicz said.

The bond strategies look to fund projects that support minority communities and aim to create positive change. Such investments are often called “direct” impact. For instance, they may provide loans to minority business owners or increase access to safe and affordable housing.

The equity ETFs seek what is called a “collective impact, investing in companies that have diverse workforces and leadership or that promote programs related to equal pay, career development or equal opportunity in hiring.

Here is how Morningstar analysts rate the five funds:

• CCM Community Impact Bond . The fund’s managers buy bonds that look to create positive impact by targeting projects related to minority advancement, rural community development, poverty alleviation, education and childcare and more. Over the trailing 10 years ended Dec. 31, 2024, the fund’s institutional share class trailed its peers in the intermediate core-bond Morningstar Category by 14. However, performance recovered recently, and the fund held up better than peers and the index over the trailing three- and five-year periods.
• CCM Affordable Housing MBS ETF OWNS . Also managed by CCM, the fund invests in mortgage loans that were made to minority or low-income families. CCM Affordable Housing MBS ETF stands out for its high degree of exposure to positive impact, based on analysis using Morningstar Sustainalytics Impact Metrics. Although the fund posted negative three-year returns through the end of 2024, it landed in the top half of the intermediate government-bond Morningstar Category and bested the Morningstar US Government Bond Index over the period.
• Calvert US Large-Cap Diversity, Equity And Inclusion Index ETF CDEI . Calvert was one of the early movers in U.S. sustainable investing in the 1980s, so this index builds on a time-tested philosophy and approach. The index-tracking fund seeks to invest in companies that have diverse leaders and workforces as measured by gender, ethnicity, age, cultural background and skill set. Since its inception in January 2023, the fund has lagged the Morningstar US Large-Mid Cap Index by more than 2 percentage points.
• Impact Shares NAACP Minority Empowerment ETF NACP . This is the strongest performer of the group, gaining 8.4% annualized over the past three years through Dec. 31, 2024, and landing in the top half of the large-blend Morningstar category. The fund tracks the Morningstar Minority Empowerment Index, which considers factors such as board diversity, corporate policies to eliminate discrimination and ensure equal opportunity, and programs that promote long-term economic development among minority communities.
• Adasina Social Justice All Cap Global ETF JSTC . The fund evaluates index constituents based on proprietary criteria that encompass racial, gender, economic, and climate justice. For instance, the fund excludes companies that own or operate prisons and immigrant detention centers, companies that oppose civil rights legislation, and companies that support restricting reproductive rights. The fund lagged its benchmark over the past three years through December 2024, partly because it underweighted Nvidia and excluded Meta Platforms.

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