The Black community remains systemically underrepresented across all bands of society, from city councils to business school faculties to the media. Within finance, the issue compounds, with a 2020 study finding that 79% of financial advisors identify as white, while on the corporate side, only four CEOs from the Fortune 500 in 2021 were Black.
There are distinct Black voices within the finance world that are working to empower and change the narrative for minorities and Black communities. Two ETFs in particular targeting change are the NAACP Minority Empowerment ETF (NACP) and the Adasina Social Justice All Cap Global ETF (JSTC).
The NACP tracks the Morningstar Minority Empowerment Index that provides exposure to U.S. companies that exhibit strong diversity policies both racially and ethnically. The fund seeks to provide exposure to U.S. large- and mid-cap companies that fall within the NAACP’s values of good corporate citizens.
The underlying index is constructed with a rules-based methodology and pulls from the Morningstar US Large-Mid Cap Index, and selects companies with strong minority empowerment practices. The screen excludes companies that derive more than 5% of their revenues from predatory lending activities; tobacco products; involvement in the production of riot control weapons; the operation of correctional facilities or providing security services; the production of oil, gas, or coal, as well as companies that are non-compliant with the UN Global Compact or that have a detrimental score for applicable controversies.
Companies included are assigned a minority empowerment composite score that includes data points on board diversity, discrimination policy, community development programs, minority-inclusive health and safety management systems, gender pay disclosure, and more.
The issuer of NACP, Impact Shares, is a nonprofit organization and donates all of its net profits from the management of the NACP to the NAACP, whose primary mission is to work to build a society with equal rights for all individuals regardless of their race or ethnicity.
NACP carries an expense ratio of 0.49%.
The Adasina Social Justice All Cap Global ETF (JSTC) is a global, all-cap fund and utilizes community-sourced impact data to set standards for how companies engage in gender, economic, racial, and climate justice. The ETF allows clients to invest in alignment with their social justice values.
JSTC seeks to track the Adasina Social Justice Index. This index was created to support progressive movements for change through public companies by utilizing traditional ESG metrics and the Adasina social justice investment criteria. Categories considered include racial justice, gender justice, economic justice, climate justice, and movement-aligned measures that seek to advance social equity and the general welfare of the planet and people.
The fund has a long list of criteria that it uses to exclude companies, including, among others, those that own prisons or immigration detention centers, do not support LGBTQ equality, pay sub-minimum wages or excessive executive wages, contribute significantly to climate change, or negatively impact animal welfare.
Adasina Social Capital, the issuer of JSTC, is Black-owned and majority-operated by women, people of color, and members of the LGBTQ+ community.
JSTC carries an expense ratio of 0.89% and is as actively managed.
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