Pro-LGBT investment firm Equality Capital for investors supporting gay rights
Investors looking to support gay rights will soon have a safe place to put their money when pro-LGBT investment firm Equality Capital launches in Britain this week.
The firm will be one of the UK's first wealth managers focused on investing in corporations and governments which have a proven track record of respecting and protecting lesbian, gay, bisexual and transgender (LGBT) citizens, and will exclude those that fail to pass its ethical screening test.
Managing partner Charlie Nicholls told the Press Association that it was not possible to launch a company like Equality Capital successfully until very recently.
"LGBT rights were not forward enough in enough countries to be able to build globally diversified portfolios, because you were locked out of a lot of markets.
"Over the past five years, obviously, gay rights have come up enormously across the world, which gives us the ability to build diversified portfolios and not compromise on the sort of diversity and growth aspect to get at these LGBT friendly sectors."
The wealth manager, which opens for public investments on Thursday, is part of CPN Investment Management, which has around £200 million in assets under management (AUM).
It has run its trial with just under £1 million in AUM from about 15 clients, but is targeting £100 million in AUM by the end of their first year, representing investments from up to 300 clients.
Those are expected to be distributed across three different risk-weighted portfolios with targeted returns of between 5% and 15%.
Investments supporting the governments of countries like Uganda, which has made headlines for discrimination against the LGBT community, and a number of Middle Eastern regimes, will be barred from its portfolios.
But Mr Nicholls said the greatest difference for the average investor is likely to be the exclusion of emerging markets like Russia and China, which feature heavily in many portfolios but "have terrible, terrible records of LGBT rights".
Equality Capital will screen and score potential markets on criteria including marriage equality, employment discrimination laws, adoption and military service rights, and legal punishments for being LGBT.
People who are invested in firms like gas giant Gazprom or other government-backed organisations "may not realise that they're directly funding the Russian government and may find that unpalatable", Mr Nicholls said.
Those will be replaced by "more LGBT-friendly investments" in places like Latin America that have similar risk profiles.
"You can get the same exposure to risk and the same exposure to high growth areas but by avoiding these anti-gay regimes," Mr Nicholls said.
He hopes the firm will spur change in countries that rely on foreign investments.
"We're realistic that we've got to build a client base and a market ... but the more that people are aware of it, the more that people invest, the more of a difference we can make."