Many investors seeking LGBTQ+ equity investing opportunities can't find them, providing a growth area for wealth managers
Boosting equity and inclusion for the LGBTQ+ community has strong support from investors whether they are part of the community or not.
A recent survey from Morgan Stanley revealed that half of investors want opportunities to invest in LGBTQ+ equity and inclusion; including 86% of those who identify as part of the community and 76% who have a household member who does.
Younger investors are also more likely to be interested in these investments (67% of Gen Z and 56% of Millennials).
However, Morgan Stanley says that the demand is not matched by supply, providing an opportunity for asset managers and wealth managers to offer unique investment options.
Among survey respondents, 42% highlighted a lack of LGBTQ+ equity investment opportunities, 32% did not know how to invest in this theme and 31% lacked research or data on the theme.
In the US alone, there are 26 million LGBTQ+ people, around 8% of the population but 21% of Gen Z adults, highlighting the growing importance of this community as next-gen investors.
But many face workplace discrimination and founders struggle to attract venture capital investment; just 0.5% of VC capital raised in the US according to startout.org data.
Morgan Stanley’s global head of talent and director of the Institute for Inclusion, Susan Reid, says that investor capital has a key role to play in addressing inequities for LGBTQ+ people.
“Investing with LGBTQ+ objectives describes the effort to direct investment capital toward the advancement of populations historically disadvantaged based on their sexual orientation or gender identity,” said Reid. “The goal is to advance equitable and inclusive opportunities for the LGBTQ+ community, while also delivering market-rate financial returns.”
Business case
The Wall Street firm says that, given the strong support and demand for investing opportunities focused on LGBTQ+, the business case for addressing the low level of products available is clear.
It calculates that the investors who are interested in LGBTQ+ equity investing are set to gain $73 trillion in the wealth transfer from the older generations and the firm estimates this could boost demand for these investments by 40%.
Currently, Morgan Stanley calculates that $20 trillion is held by investors interested in this theme.
“Any new product or strategy aligned with this theme—from screening approaches to funds that target positive impact—could be well-received by interested investors, giving asset managers the opportunity to potentially differentiate themselves in the market,” said Jessica Alsford, Morgan Stanley’s Chief Sustainability Officer and CEO of the Institute for Sustainable Investing.
The full report is at: https://www.morganstanley.com/ideas/sustainable-investing-lgbtq-opportunities-demand
