Finding the Right Investments to Make Your Portfolio LGBTQ Friendly

Anyone investing in the stock market hopes to see their portfolio’s account balance grow, grow and grow some more.

But these days many investors are interested not only in their financial return, but also about the values of the companies they invest in, such as how companies handle LGBTQ issues. For those investors, this raises the question: Is there a way to build an investment portfolio that makes money while still being friendly to that cause?

There is, and information about which companies fit the bill has become easier to acquire, says Carlos Legaspy, owner and CEO of Insight Securities, and the author of Going for Broke.

“Social responsibility in general is something that has become a factor when evaluating investments,” he says.

Ratings based on social responsibility are available for many publicly traded companies. In some cases, those ratings zero in on how well the company performs in terms of LGBTQ inclusion, Legaspy says, but there are also ratings for other issues, such as environmental policies, gender diversity and racial diversity.

Making A Match Between Values And Profits

A good place for investors to start, Legaspy says, is the Human Rights Campaign, an advocacy group that publishes a Corporate Equality Index. ​​The group reports that the index’s data tells the story of nearly two decades of year-over-year growth in the adoption of policies and practices indicative of employers’ commitment to equality.

But even as someone looks for investments that align with their values, they still want those investments to provide a good return, Legaspy says. And, as it turns out, those two things are not mutually exclusive. A Credit Suisse stock analysis released near the end of 2020 found that LGBTQ friendly companies outperformed the market as a whole.

Also, a recent Gallup poll showed that the percentage of U.S. adults who self-identify as lesbian, gay, bisexual, transgender or something other than heterosexual has increased to a new high of 7.1%. That is double the percentage from 2012, when Gallup first measured it.

What’s more, the percentages for young people are even higher, with 20.8% of Gen Z and 10.5% of Millennials identifying as LGBTQ. All of that indicates a broadening base of potential investors who will be turning a critical eye toward how companies operate, Legaspy says.

“It’s what I call ‘democratization of investing,’ where investors can exercise influence over management of the companies they’re investing in by voting in proxies, and simply getting the selected companies to outperform because they attract more investment dollars,” Legaspy says.

Finding The Right Companies

Based on the 2022 Corporate Equality Index, there are plenty of stocks to choose from. Among the Fortune 500-ranked businesses, 258 achieved a 100% rating on the index, compared to 233 last year. Some of those included Walmart, Amazon, Apple, CVS and Walgreen.

Also, 93 percent of the Fortune 500 companies include “sexual orientation” in their nondiscrimination policies and 91 percent include “gender identity.” Over 66 percent of Fortune 500 companies offer transgender-inclusive healthcare benefits.

Things might be slightly trickier when investing in an exchange-traded fund (ETF) that includes stocks from multiple companies that may or may not be LGBTQ friendly. Legaspy says he’s unaware of any ETFs that are LGBTQ focused, but adds that “there are broader social responsibility investing ETFs that would capture some of that inclusivity.”

Anyone who wants their investments to focus on companies with inclusive policies should make that part of the equation when they are looking for a financial professional, Legaspy says.

“It starts with the advisor,” Legaspy says. “Your local LGBTQ Chamber of Commerce can recommend advisors who are either LGBTQ themselves or strong allies of the community.”

Carlos Legaspy, the author of Going for Broke, is owner and CEO of Insight Securities, a financial firm based in Illinois. He has been securities licensed in the United States since 1991. Legaspy graduated from Monterrey Institute of Technology in Monterrey, Mexico, with a bachelor’s degree in Information Systems in 1989. He is also a Certified Co-leader for Mankind Project International, leading trainings around modern masculinity, emotional intelligence and multi-cultural awareness.

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