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Investment Profile

Investment Profile: Equality Works

  • Equality Works allows you to invest in companies that support the LGBT community
  • The fund includes stocks from companies like Sears, Sprint, and Royal Dutch Shell
  • Equality Works provides exposure to a diverse array of stocks
3 min read

Nearly 8 million U.S. citizens identify as lesbian, gay, bisexual, and transgender (LGBT). That equates to around 3% of the population; It’s roughly equivalent to the population of New Jersey.

The millions that make up the LGBT community still face various forms of discrimination, particularly in the workplace. They face hiring hurdles, can be shut out from receiving certain workplace benefits, and can even be fired in some places for their sexual orientation or gender expression.

Some companies, however, are ahead of the curve. These employers go out of their way to ensure that LGBT workers are treated with fairness and respect. They do their best to remove discriminatory practices during the hiring process as well.

These are pioneering and progressive companies, and the type that you’ll find in Equality Works, our name for the Workplace Equality Portfolio (Ticker: EQLT), an exchange-traded fund (ETF) on Stash.

What’s in the fund?

Equality Works comprises 246 large U.S. and foreign companies that have equal employment opportunity (EEO) policies prohibiting discrimination based on sexual orientation and gender identity, along with other corporate benefits and privileges.

The fund’s largest holdings include companies like Sears Holdings Corp., Sprint, Abercrombie & Fitch, and Royal Dutch Shell. U.S. stocks make up 90% of the fund’s holdings, and they’re mostly concentrated in the financial, tech, and consumer cyclicals industries.

But it also includes Many household names, such as Mattel Inc., Coach Inc., Viacom Inc., Verizon Communications Inc., The Kraft Heinz Co., McDonald’s Corp., PayPal Holdings, Inc., GlaxoSmithKline., Campbell Soup Co., Procter Gamble Co., Starbucks Corp., Clorox Co. and Target Corp.

While the holdings span numerous industries–from retail to fossil fuels–the common thread is that all of the companies contained in Equality Works support the LGBT community. It tracks the Workplace Equality Index, according to the fund’s prospectus.

Performance

The fund launched in 2014 and is managed by Denver Investments.

Year-to-date, as of May 2018, the fund had a return of -0.39%, according to Morningstar. Though 2018 hasn’t been a strong year so far, the preceding couple of years saw more substantial returns.

In 2016, for example, it had a return of 13.93%. In 2017, it had a return of 21.33%. In 2015, the only period for which there is full-year data, the fund returned -2.33%.

Are there similar funds?

Though it’s not specifically centered around the LGBT community, the iShares MSCI KLD 400 Social ETF (ticker: DSI) gives investors exposure to “socially responsible” companies. That means investors will get “access to a broad range of stocks that have been screened for positive environmental, social, and governance characteristics,” according to iShares.

Among the fund’s 403 holdings are stocks from companies like Microsoft, Facebook, Alphabet, and Coca-Cola. As for DSI’s performance, the fund has returned 0.29%, as of May 2018, according to Morningstar. The fund’s return has grown every year for the past decade, with its strongest year being 2013, when it had a return of 35.43%.

Risks and considerations

There are risks associated with Equality Works.

Political trends that support LGBT rights could stall, and the number of companies that support LGBT equality could decrease, according to the fund prospectus. The fund also has a concentration in financial services companies, which can be subject to additional regulations and market risks than companies in other industries.  

Many of the fund’s holdings are based outside of the U.S., so investors may be exposed to foreign investment and foreign currency risks. Similarly, the fund invests in the stocks of many small and medium-sized companies, which can be more volatile than the stocks of larger companies

The fund’s expense ratio is 0.75%, which is higher than the industry average.

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By Sam Becker
Sam Becker is Stash's financial writer.

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