A New Investment Fund Is Saying ‘No’ to DEI-Focused Companies — And ‘Yes’ to Others

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Sadly, some companies have rejected the practice of hiring on skill and ability and are now hiring on the basis of race and gender.

My investment firm, Azoria, has identified three dozen S&P 500 companies with explicit racial and gender hiring targets.

Early next year, we’ll launch an ETF fund that invests in every S&P 500 company — except those that use these hiring targets.

The premise is straightforward: companies that hire on skill and ability will outperform those that hire on race and gender.

Best Buy is one of the three dozen companies we won’t be buying. It’s a $20 billion business that has a written policy that “1 in 3 new corporate salaried positions” are “to be filled by BIPOC.”

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These policies don’t just hurt employees. Shareholders, too, are paying the price for these racial and gender hiring targets in the form of lower stock returns.

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Over the past year, a portfolio of the three dozen S&P 500 companies with racial and gender hiring targets has returned just 12%, compared to the S&P 500’s 30%. Over two years, this portfolio has delivered 17%, compared to the S&P 500’s 60%, according to our own internal analysis.

Throughout both periods, 70% of these companies underperformed the plain-old S&P 500 index, which means that the overall S&P 500 would have been even higher if these companies had not been included.

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Those who see the light and abandon their hiring targets will be added back into the fund, allowing our investors to benefit from their renewed commitment to meritocracy {snip}

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