June is Pride Month and it’s not just a celebration of the LGBTQ+ community. It’s also a time to reflect on how rising LGBTQ+ visibility and economic influence are shaping the investing world.
Nearly 1 in 10 U.S. adults now identify as LGBTQ+, with even higher rates among Gen Z. This demographic shift translates to significant economic power, with an estimated $4 trillion to $5 trillion in global LGBTQ+ purchasing power.
Values-aligned investing aims to generate positive social outcomes alongside financial returns. For LGBTQ+ inclusion, this involves investing in companies and funds that promote workplace and leadership diversity, offer products/services for this population and engage in advocacy and community initiatives.
Millennials and Gen Z are a exerting a lot of influence in this regard: 67% of Gen Z and 56% of Millennials say they are interested in LGBTQ+ investments, according to a 2023 Morgan Stanley poll.
As younger generations seek investments that reflect their values, asset managers and investment advisors are responding with products, insights and services. For the LGBTQ+ community and their allies, there’s never been a better time to align investment portfolios with principles of inclusion, equity and social impact.
Investing with pride: where to start
To invest with an LGBTQ+ inclusion lens, you could start by consulting your advisor about incorporating this criteria into your portfolio. If you prefer self-directed investing, tools like Till Investments’ Fund Finder, available on our platform, and Natural Investments’ Heart Rating can help you find mutual funds and ETFs that prioritize inclusion.
Additionally, the Morningstar Developed Markets LGBTQ+ Leaders Index, launched in June 2024, is a benchmark of 100 large- and midcap companies from diverse regions and sectors that demonstrate strong inclusive policies and practices. Investors can use this index to identify companies for direct stock investment or to monitor for future mutual funds and ETFs that track this benchmark.
Whether you’re part of the community or an ally, aligning your investments with your values can help drive meaningful social change during Pride Month and beyond.
“LGBTI inclusion is not only the right thing to do; it is also the economically smart thing to do.” – IFC Guide to Investing in Inclusion
Among the leaders in the category:
- Domini Impact Investments integrates LGBTQ+ inclusion across all funds, considering sexual orientation and gender identity in investment decisions and proxy voting.
- Green Century Funds incorporates non-discrimination (including sexual orientation) into investment criteria and supports shareholder resolutions for LGBTQ+ rights.
- Parnassus Funds evaluates equal opportunity policies for underrepresented groups, including LGBTQ+, and supports workplace diversity and pay equity.
- Trillium Asset Management is an industry leader in LGBTQ+ inclusion, systematically evaluating and advocating for LGBTQ-friendly policies across all holdings.
Investing with pride: ETFs and mutual funds with a diversity and inclusion focus
Exchange Traded Funds:
- Calvert US Large-Cap Diversity, Equity and Inclusion Index ETF (CDEI): Invests in U.S. companies leading in DEI, including strong LGBTQ-inclusive policies.
- iShares MSCI KLD 400 Social ETF (DSI): Screens for U.S. companies with strong ESG and DEI practices, including LGBTQ+ policies.
- Vanguard ESG U.S. Stock ETF (ESGV): Broad ESG focus, including diversity and inclusion factors.
- Adasina Social Justice All Cap Global ETF (JSTC): Invests globally in companies with strong social justice and DEI practices, including LGBTQ+ inclusion.
- SPDR SSGA Gender Diversity Index ETF (SHE): Focuses on companies with high gender diversity in leadership; many with robust LGBTQ+ policies.
Mutual Funds:
- Neuberger Berman Sustainable Equity Fund (NBSRX): Focuses on U.S. companies with strong ESG and DEI practices.
- Parnassus Core Equity Fund Investor Shares (PRBLX): Focuses on ESG leaders, including those with inclusive workplace policies.
- TIAA-CREF Social Choice Equity Fund (TISCX): Screens for ESG and DEI factors, including LGBTQ+ policies.
- Vanguard FTSE Social Index Fund Admiral (VFTAX): Invests in U.S. companies with strong ESG profiles, including diversity and inclusion.
Investing with pride: Additional resources
- GIIN Repository of Gender Lens Investing Resources
- Investopedia How to Invest in LGBTQ+-Friendly Companies
- LGBTI Lens Investing Guide (IFC)
- Chasing Rainbows: A New Frontier: Impact Investing for LGBTQ+ Communities
Read more: The Sustainable Finance Podcast: Strategies for LGNTQ+ investors
