Investing in LGBT-friendly companies
The Credit Suisse building in Basel, Switzerland.
Today, New Jersey became the latest state to allow same-sex marriage. Also today, a new stock index like the DOW Jones or the S&P launches, but this one tracks the stocks of companies that are friendly to Lesbian, Gay, Bisexual and Transgender issues. It's called the LGBT Equality Index, and was created by Credit Suisse --which is also starting a portfolio for investors who want to put their money behind LGBT-friendly companies.
When Credit Suisse came up with the idea of an LGBT equality index, it had to quantify just how gay-friendly a company was. So, it partnered with the Human Rights Campaign, a civil rights group devoted to gay issues, and used data from its Corporate Equality Index.
Nicole Douillet is a vice president in equities trading at Credit Suisse which created the index. "With our index, we just wanted to have a metric to compare performance of companies with pro-LGBT polices to the overall market," Douillet says.
Each company gets a score from zero to one hundred. For every LGBT friendly policy, the company gets more points. "We start with a universe of the S&P composite 1500, and then we filter out any company that scores below an 80," Douillet says.
Starting today, Credit Suisse clients can invest in a portfolio made up of companies within that index. Lloyd Kurtz, a chief investment officer at Nelson Capital Management who writes about social investment, says that as with any type of social investing, each one has its own nuances. "Most of these indexes behave exactly the way you'd expect them to behave, based in the risk factors."
Kurtz says the central measure of success is whether the client is happy with it, "If it meets the client's needs, who cares right? Ultimately, if the customers care about it and we give them portfolios that reflect their values and concerns we are adding value."