Cea says they chose to make PRID a large-cap, market-cap weighted fund so that it could be a core holding without significantly changing an investor's risk-return profile.
He adds that the fund is not geared solely toward the LGBT community, and posits that it fits for anyone who “believes in basic human rights.”
Paul Weisbruch, head of ETF/options sales and trading at Esposito Securities, concurs. He says these funds may appeal to the self-directed retail investor who already uses ETFs and is interested in ESG investing more so than financial advisors who might shy away from these funds' relatively high fees.
EQLT charges an expense ratio of 0.75 percent versus PRID’s fee of 0.65 percent, which are on the high side in the world of ESG ETFs.
Cea defends the higher fees by saying the companies in the index will likely outperform because firms with a deeper talent pool will perform better in the long run.
“Not only are you getting your U.S. large-cap exposure, but as the product grows, you will be sending a message to companies that they need to onboard better practices," Cea says. "And, for some of our investors, I think that's really important.”
For investors who value workplace diversity, Weisbruch gives a slight edge to EQLT. “I feel like that offering itself probably would be more successful with most investors only because it doesn't resemble a typical large-cap portfolio that looks like SPY,” he says.
That’s partially the case, but not overly so. According to ETF Research Center, the percentage of PRID’s holdings that are in SPY is 83 percent. That number is 71 percent for EQLT.
The bottom line is that while LGBT workplace equality is an important issue, it hasn’t yet resonated with a larger audience as an investing theme. In time, perhaps it will. But the performance has to be there for these two ETFs to grow beyond a niche market demographic.