Last month, ALPS rolled out the Workplace Equality Portfolio (EQLT) , a socially responsible spin on companies that support lesbian, gay, bisexual and transgender (LGBT) equality in the workplace.
On the surface, EQLT sounds like a hyper-focused niche ETF, but upon closer examination investors will see the rookie fund shares some things in common with more established ETFs that do not subscribe to traditional index methodology. For example, EQLT’s 162 holdings are equal-weighted.
“By going the equal route, products like EQLT give smaller stocks a louder voice in performance. That can increase returns in a broad market rally, when small-caps tend to outperform, but also brings added risk and can create the illusion that a theme is working when it’s actually the small-cap bent that’s providing the edge,” reports Eric Balchunas for Bloomberg.
Buoyed by the success of the Guggenheim S&P Equal Weight ETF (RSP) , as just one example, more equal weight ETFs have come to market in recent and investors have become increasingly comfortable with the concept. [Equal Weight ETFs for All Investors]
EQLT’s “screening criteria generally include mandatory language in a company’s equal employment opportunity (EEO) statement prohibiting discrimination based on sexual orientation and gender identity, offering health benefits to same-sex partners or spouses of employees, along with other corporate benefits and privileges. Other screens are performed with the goal of eliminating companies that would detract from the Index such as companies in bankruptcy or reorganization,” according to ALPS.
John Roberts of Denver Investments told Balchunas that “the S&P Equal Weight Index is a better benchmark for the ETF than the S&P 500.” Noteworthy is the fact that EQLT’s underlying index, the Workplace Equality Index (LGBTEQLT), which was created by Denver Investment Advisors, is up 32% in the past year compared to 21% for the S&P 500, according to Bloomberg. [ALPS Debuts Workplace Equality ETF]
EQLT Top-10 Holdings
Table Courtesy: ALPS
ETF Trends editorial team contributed to this article. Tom Lydon’s clients own shares of RSP.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.