The LGBT Diversity Fund Managers employ a range of informational and management tools to effectively manage the LGBT Diversity Fund. At the top-level, the investment management process segments into the following aspects:
- Defining the Universe of companies (stocks) that satisfies the Managers’ objective for ‘LGBT friendliness’ and market potential
Two Part Active Management Process:
- As a preliminary screen, the stocks in this LGBT Universe are subjected to various non-LGBT related fundamental and technical criteria
- The Managers perform a rigorous risk management overlay to further concentrate the Universe prior to constructing the final LGBT portfolio
Based on the Managers’ LGBT scoring for each of the stocks and the output from the LGBT defined Universe and subsequent risk management overlay, the resulting stock weights are then decided.
In order to define the LGBT Universe and per-stock LGBT scoring, the Fund Managers may utilise a range of third party information sources, as well as proprietary tools (both quantitative and experience based), to support the Managers’ active decisions regarding which companies merit being part of the Fund’s universe of LGBT friendly stocks. Examples of such publicly available information would be the annual workplace equality reports from organisations such as:
- Human Rights Campaign (HRC) Foundation (the HRC’s Corporate Equality Index (CEI) covers US quoted stocks)
- Diversity Inc. (with both LGBT and wider diversity categories, and covering mainly US-based activities)
- Stonewall (their Workplace Equality Index (WEI) mainly captures UK-based activities, but since 2012, they have also included a ‘Global Employer of the Year’ award)
- Australian Workplace Equality Index (AWEI)
- Newer emerging screens and media coverage
In the ‘investment merit’ evaluation and LGBT scoring of the stocks, the Fund Managers underpin the active judgement decisions with LGBT relevant research (both third party and in-house research), e.g. the May 2013 study by the Williams Institute, entitled “The Business Impact of LGBT-Supportive Workplace Policies” and which examined the findings of 33 individual research studies (this study was independently conducted by the Williams Institute at the UCLA School of Law through funding provided by Credit Suisse and IBM with the support and cooperation of LGBT Capital).