Just in time for Pride Month, Wall Street has its first LGBTQ-focused ETF.
ProcureAM launched the new LGBTQ100 ESG ETF this week in partnership with LGBTQ Loyalty Holdings. The first of its kind, the fund uses LGBTQ community data to identify the top 100 largest companies that best align with the group’s environmental, social and corporate governance (ESG) goals. The fund includes names like Estee Lauder, Facebook, Starbucks, PayPal, Visa, and more.
In an interview with CNBC’s “ETF Edge” Tom Lydon, CEO of ETF Trends, gave his outlook on the fund.
“You have a really strong group of advocates for this, at the right time, and I think these things are going to be crucial for the future,” he said on Wednesday, referring to the fund’s supporters like former Congressman Barney Frank and Martina Navratilova, a former professional tennis player and well-known advocate of transgender and gay rights.
“People will be paying attention,” added Lydon. “I think there will be a lot of attraction for this.”
The man behind the fund, Bob Tull, co-founder of Procure Holdings, shared his insider’s perspective on the fund in the same interview. He explained the unique approach to selecting securities within the fund that sets it apart from traditional funds that use quantitative analysis only.
“The structure started with over a thousand stocks and then the first thing we did was check it for inclusion and ESG against UN standards,” he said. “The members of the community are very loyal, so this index has a sentiment component.”
In the same “ETF Edge” interview, Andrew McOrmond, Managing Director at WallachBeth Capital, said it was on this new wave of investors. He says the new investor is younger and emphasizes the intersection between social governance goals and investing. These young people are also advancing in these top companies.
“If these companies don’t support exclusion and a diverse workplace, they will attract top talent,” he said. “Top talent means the company will do better.”
It’s a positive feedback loop. When talented youngsters move to companies that strengthen ESG values, those companies do better and, as a result, their share price rises over the long term.
“I think that’s the underlying thing that will drive this thing in the long run,” said McOrmond.
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