Shorting anti-LGBT rights
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Opinion

Shorting anti-LGBT rights

Diversification, as any portfolio manager will tell you, can cap downside risk and even boost smart beta across the board. But is it also true in the real economy? Some think there’s evidence – albeit of a correlational, rather than the causal, kind – that it can.

Credit Suisse equity analysts in April revealed that a proprietary benchmark basket of 270 companies with progressive pro-lesbian, gay, bisexual and transgender polices (LGBT), outperformed the MSCI All Country World Index by 3% a year over the last six years. The same LGBT basket delivered a 140-basis point outperformance annually over a custom basket of companies in North America, Europe and Australia.

The findings are intuitive. Teams of mixed gender, ethnicity, age and sexual orientation boost the likelihood that a given company will understand market trends and customer preferences, while working efficiently with cross-border teams. By contrast, homogeneity could stifle innovation.

Frozen

Meanwhile Deutsche Bank has frozen plans to hire 250 technology-focused staff in North Carolina, citing the state’s controversial law that eliminated LGBT protections. 

The move achieved a rare feat for an investment bank by earning left-wing acclaim. 

While its aims are laudable, Deutsche might do well to remember that gay marriage remains illegal in Germany, while same-sex marriage has been legally recognized in North Carolina since 2014. Should North Carolinians no-platform the German bank as a result?

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