Investment Funds Promising Enhanced Returns Without "Troublesome Complications"
The right-wing crusade against perceived 'wokeness' in major US corporations has reached new heights, with a new investment fund allowing individuals to investment in this cause, allegedly for financial gains.
John Doe doesn't require excessive words to explain the principle behind his new exchange-traded stock fund (ETF): it essentially mirrors the US benchmark index with the 500 largest companies, but excludes firms that have set objectives to champion women and minorities in their workforce. Doe recently established the investment firm XYZ with the ambition of moving the right-wing's battle against what he, along with other conservative Americans, perceives as "wokeness", representing a progressive social agenda, into significant US corporations.
He launched his inaugural fund, the XYZ 500 Meritocracy ETF, not by coincidence in Florida, at the Mar-a-Lago resort complex, owned by former and potential future US President Donald Trump. Doe views Trump's election victory as a rejection of supposed DEI guidelines "nationwide". DEI stands for Diversity, Equity, and Inclusion, representing the endeavors of many companies to promote equal opportunities for women and not exclude sexual minorities. Doe, Trump, and the MAGA movement supporters regard these objectives as an obstacle. Many notable companies, such as Disney and Harley Davidson, have been targets of anti-DEI campaigns in recent months and years.
XYZ's Meritocracy Fund concentrates primarily on opposing diversity advancement in businesses, particularly against alleged minority quotas in hiring or advancements. In support of this, Doe argues, "Companies that hire and promote based on skills will surpass those depending on origin and gender," Doe declared at the launch of his fund.
Betrayal of meritocracy
The belief that companies underperform when they adopt irrelevant business goals such as climate protection or diversity, or even openly stance against racism and homophobia, is widespread among right-wing Republicans in the US. According to his own statements, Doe has identified over three dozen companies in the S&P500 index that, through alleged minority quotas, are committing "betrayal" of meritocracy and the values that "made America great". The stock price of these companies, which will not be included in the new ETF in the future, has climbed by just 12% this year, while the overall index has climbed by nearly 30%.
This calculation is not verifiable. Doe only mentioned one instance: the coffee chain Starbucks, whose economic problems, according to him, are a result of not hiring "the finest and brightest candidates" due to rigid quotas. Starbucks has since refuted this depiction. While there are no strict quotas that prevent someone from being hired or promoted, the goal is to have women and certain minorities better represented in the workforce. Starbucks has been grappling with declining sales and rising costs for some time.
Supporters of promoting diversity argue that this allows businesses to attract superior candidates, as they would otherwise be discriminated against and excluded based on gender or skin color. Similarly, advocates for environmental sustainability objectives claim that they will, in the long term, benefit a company's economic success, while right-wing activists perceive them as ideological and harmful to business. A look at the stock market performance paints a dismal picture for both sides. The S&P 500 ESG Index, which includes only the largest US companies committed to environmental and socio-economic sustainability standards, has gained 27.6% this year. This is slightly inferior to the S&P 500, which has climbed by 28.4%. Opposed-to-ESG funds such as the Conservative American Values ETF (+26.5%) and the Point Bridge America First ETF (+22.5%) have performed even worse. Over two years, neither sustainable nor anti-woke criteria have significantly impacted stock performance. Nonetheless, investors typically pay higher fees for actively managed funds with ideological mandates compared to those tracking an index.
John Doe's XYZ 500 Meritocracy ETF, designed to mirror the US benchmark index, excludes companies that prioritize diversity and inclusion in their workforce. As a result, some ETFs focusing on conservative values, like the Conservative American Values ETF and the Point Bridge America First ETF, may underperform ETFs that invest in companies with strong environmental, social, and governance (ESG) practices, such as the S&P 500 ESG Index.
