How does the LGBT ETF select its holdings?

The ETF's manager, Strategas Asset Management, uses publicly disclosed corporate lobbying data filed under the Lobbying Disclosure Act (LDA) to assess companies' lobbying intensity. The ETF focuses on lobbying spend and the company's size to determine lobbying intensity and selects securities based solely on this factor.

What types of companies are included in the LGBT ETF?

The LGBT ETF includes a mix of large, medium, and small-cap U.S. and non-U.S. companies that engage in lobbying activities in Washington D.C. The companies are from various sectors and may have a range of policy interests.

What is the investment strategy of the LGBT ETF?

The ETF follows a thematic investing approach based on the Adviser's tactical assessment of the market. It overweights allocations to assets it believes are favorable in the current investment environment and underweights those less favorable. The ETF's portfolio generally consists of about 100 securities with the highest lobbying intensity ratings.

What are the geographical and sector allocations of the LGBT ETF?

Under normal circumstances, the ETF invests in at least three countries, including the U.S., and allocates at least 40% of its total assets to non-U.S. companies. However, if market conditions are unfavorable, the allocation to non-U.S. companies may be at least 30%. The ETF has significant exposure to companies in the industrials, healthcare, and information technology sectors, as well as exposure to companies located in the European region as of April 18, 2023.

6 min read

By Ron Koren, ETF Insider

What is the LGBT ETF ?

Q: What is the LGBT ETF?

The LGBT ETF, also known as the Lobbying &amp; Advocacy ETF, is an actively-managed exchange-traded fund that aims to invest in U.S. and non-U.S. companies with a strong interest in influencing public policy through lobbying activities in Washington D.C.

In recent years, socially responsible investing has gained immense popularity, and investors are increasingly seeking ways to align their financial goals with their ethical and social values. One such investment avenue that has emerged in response to this demand is the LGBT ETF. This exchange-traded fund not only offers investors an opportunity for financial growth but also allows them to support companies that promote equality and inclusivity. In this article, we will delve into the world of the LGBT ETF, exploring its underlying principles, benefits, considerations, and investment potential.

LGBT ETF: Overview

The LGBT ETF, also known as the LGBTQ Equality ETF, is an exchange-traded fund that seeks to track the performance of the LGBTQ Loyalty Preference Index. This index represents the top 100 U.S. companies that demonstrate a commitment to promoting equality in the workplace for employees of all gender and sexual orientation. Additionally, these companies must exhibit consistently strong financial performance, while also supporting LGBTQ communities and embracing environmental, social, and governance (ESG) principles.

LGBT ETF Underlying and Exposure: What does it track and how?

The ETF primarily invests at least 80% of its net assets in components of the Underlying Index. These components consist of companies that have been screened to uphold LGBTQ or ESG positions. The Index Provider constructs the Underlying Index by starting with an investable universe of Fortune 1000 companies earning a 100% rating based on an annual survey conducted by a national LGBT advocacy organization. The survey scores companies on non-discrimination policies, equitable benefits for LGBTQ workers and their families, and supporting an inclusive culture.
After the initial screening, the remaining companies are further screened for superior fundamentals, low price volatility, and high market liquidity. Those meeting the criteria are then categorized into the ESG Group or the LGBTQ Brand Loyalty & Support Group. Companies in the RBICS Gaming or Entertainment industries can be eligible for the Underlying Index if they belong to both groups.
The Underlying Index comprises 100 companies, each weighted based on a composite formula measuring inverse volatility, market capitalization, and price-to-earnings ratio. The ETF aims to replicate the Underlying Index, investing in substantially all of its components in the same proportions.

LGBT overlap What is the LGBT ETF ?

LGBT ETF: Benefits of Investing

Investing in the LGBT ETF offers several benefits:
Social Impact: By investing in companies that promote LGBTQ rights and inclusivity, investors can support positive social change.
Diversification: The ETF provides exposure to a diversified portfolio of companies that meet strict criteria for financial performance and ESG principles.
Potential for Growth: Companies supporting equality and ESG principles are often well-positioned for long-term growth, which can benefit ETF investors.
Simplified Investment: As an exchange-traded fund, the LGBT ETF offers easy access to a basket of LGBTQ-supportive companies without the need for individual stock selection.

LGBT ETF: Considerations Before Investing

While the LGBT ETF offers compelling advantages, investors should consider the following factors:
Market Risks: Like any investment, the ETF is subject to market fluctuations and potential risks. Past performance does not guarantee future results.
Concentration Risk: The ETF's focus on specific industries, such as technology, healthcare, and finance, may lead to concentration risk if these sectors face challenges.
ESG Scoring Changes: The criteria for ESG and LGBTQ Brand Loyalty & Support Group membership might change over time, impacting the composition of the Underlying Index.
Investment Goals: Investors should align the ETF's objectives with their investment goals, risk tolerance, and time horizon.

Conclusion

The LGBT ETF provides a unique investment opportunity for individuals who wish to support companies that champion LGBTQ rights and embrace ESG principles. By investing in this ETF, investors can align their financial objectives with their ethical values, contributing to a more inclusive and equitable future. However, like any investment, it is essential to conduct thorough research and consider personal financial circumstances before making investment decisions.

Disclaimer: This article does not provide investment advice or any investment advisory services. Investors should consult with a qualified financial advisor before making any investment decisions.

Sources:
The LGBT ETF prospectus or fact sheet to understand its objectives, holdings, and performance history.
The Index Provider's methodology for constructing the Underlying Index and the criteria for company inclusion.
The annual self-reported survey conducted by the national LGBT advocacy organization for insights into company ratings.
Institutional Shareholder Services' ESG rating methodology.
The Harris Poll survey results to assess LGBTQ Brand Loyalty & Support Group eligibility.

LGBT ETF issuer
LGBT ETF official page

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FAQ

What is the LGBT ETF?
The LGBT ETF, also known as the Lobbying & Advocacy ETF, is an actively-managed exchange-traded fund that aims to invest in U.S. and non-U.S. companies with a strong interest in influencing public policy through lobbying activities in Washington D.C.
How does the LGBT ETF select its holdings?
The ETF's manager, Strategas Asset Management, uses publicly disclosed corporate lobbying data filed under the Lobbying Disclosure Act (LDA) to assess companies' lobbying intensity. The ETF focuses on lobbying spend and the company's size to determine lobbying intensity and selects securities based solely on this factor.
What types of companies are included in the LGBT ETF?
The LGBT ETF includes a mix of large, medium, and small-cap U.S. and non-U.S. companies that engage in lobbying activities in Washington D.C. The companies are from various sectors and may have a range of policy interests.
What is the investment strategy of the LGBT ETF?
The ETF follows a thematic investing approach based on the Adviser's tactical assessment of the market. It overweights allocations to assets it believes are favorable in the current investment environment and underweights those less favorable. The ETF's portfolio generally consists of about 100 securities with the highest lobbying intensity ratings.
What are the geographical and sector allocations of the LGBT ETF?
Under normal circumstances, the ETF invests in at least three countries, including the U.S., and allocates at least 40% of its total assets to non-U.S. companies. However, if market conditions are unfavorable, the allocation to non-U.S. companies may be at least 30%. The ETF has significant exposure to companies in the industrials, healthcare, and information technology sectors, as well as exposure to companies located in the European region as of April 18, 2023.