Closer Look At The New ALPS Workplace Equality Portfolio ETF [ALPS ETF Trust, iShares MSCI KLD 400 Social Idx Fd (ETF)]

alpsThe ETF world continues to expand at a quick pace with a variety of new funds hitting the market in just the past few months. One of the more novel funds to make its debut as of late is certainly from ALPS which launched a Workplace Equality Portfolio ETF under the symbol of EQLT.

This new fund takes arguably a new step in the socially responsible ETF sphere, focusing on companies that have ‘progressive workplace policies that treat lesbian, gay, bisexual and transgender (LGBT) individuals equally and respectfully among all employees.’ This makes EQLT the first ETF to focus on such a metric, opening up a new level in the broader socially responsible ETF space (see A Primer on ETF Investing).

How the fund works

EQLT seeks to track the Workplace Equality Index which zeroes on in companies that have scored 100% on the Human Rights Campaign Corporate Equality Index, or those that have verifiable characteristics that would earn them a 100% score.

A firm can earn a 100% score—or have the verifiable characteristics—if it meets the following criteria; it has a section in its equal employment opportunity (EEO) statement that prohibits discrimination based on sexual orientation and gender identity, offers health benefits to same-sex partners/spouses, along with other corporate benefits and privileges.

This produces an index that has about 164 companies in its basket, while it has a slight tilt towards smaller companies, at least when compared to the S&P 500 index. The Workplace Equality Index also uses an equal-weight approach, so no single security takes up an outsized portion of the basket.

However, there is definitely some sector concentration to be aware of for this fund. Consumer discretionary and financials take up the two biggest chunks, each accounting for at least 22.9% of assets, while technology (15.7%), and industrials (10%) round out the top four segments.

“The Workplace Equality Portfolio is a timely new offering that allows all investors to access companies that embrace equality principles as a foundation in their human talent strategy,” said John Roberts, a partner at Denver Investments. “We see growing demand from investors to include the stocks of these forward-looking corporations in their investment strategies. Based on the firm’s experience managing LGBT-screened portfolios over the past 15 years, we know this approach is desired by many of our client and advisor relationships.”

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