by Kane Brolin
From the Editor: Kane Brolin is a member of the National Federation of the Blind of Indiana and is a certified financial planner practitioner. In this article he speaks to those investors who are not only interested in a way to invest their money but who want to invest in a fund that considers their values and beliefs. Here is what he has to say:
I have always found the story of the mythical ancient Greek King Sisyphus both disturbing and apropos as a figure for what it feels like to struggle in the world. In a story familiar to most who have been through literature classes in high school, after his death this king is forced to roll an immense boulder up a hill, only to watch the boulder roll back down—thus having to repeat the same futile task over and over for eternity. What I did not know until I looked up details on this story is that Sisyphus’s frustrating fate was reserved for him as a punishment for chronic deceitfulness.
It’s not hard to feel pity for Sisyphus—not just for the impossibility of his assigned task, but for the fact that he is doomed forever to repeat it, with no relief or resolution. Similarly, when the subject of disability—especially blindness—comes up in polite conversation among people at large, it seems that pity remains their most common response even today. And, while most wouldn’t admit it, I have the distinct feeling that in the back of their minds many who consider themselves “able-bodied” still wonder whose fault it is when they see someone carrying a white cane, sitting in a wheelchair, or obviously struggling with a cognitive challenge. Note the disciples’ first question to Jesus in the Gospel of St. John when they were confronted with a man who had been blind since birth: “His disciples asked him, ‘Rabbi, who sinned, this man or his parents, that he was born blind?’”
Of course, we who actually are facing a persistent physical challenge such as blindness often do come to realize that it is not a fate worse than death, as some might imagine—that its impact can be reduced to that of a nuisance. But even a blind person who has developed a measure of confidence and productivity such as me can sometimes feel a lot like Sisyphus, especially when I look at unemployment figures for blind adults in the United States, which never seem to get much better. Cornell University reports that among non-institutionalized Americans between ages twenty-one and sixty-four with a visual disability, regardless of gender or ethnic background, 62.25 percent (or roughly five out of every eight) were still unemployed in 2012. In fact, one learns from these researchers’ statistics that 54.6 percent of working-age blind adults in America (1,795,000 people) were not even in the labor force—thus, weren’t even attempting to get work.
Yet we can take heart in the knowledge that things are changing. Of those blind people who have cracked the employment barrier, more and more of us seem to be getting significant work as specialists in our chosen disciplines. Thanks to the pioneering work of Anne Cunningham and some of those connected with E.A.S.Y. LLC’s tactile graphics revolution, this even includes the graphic arts. But imagine my surprise when I discovered this past winter that one of the most prominent financial institutions in the world has come up with a way for us to invest in firms who honor and serve disabled people.
According to Wikipedia, Barclays is the seventh-largest bank in the world, with assets totaling $2.42 trillion at the end of 2011. Barclays reported net income of 845 million British pounds in the year 2014—about $1.3 billion in US terms. Barclays is so big, in fact, that it sponsors the English Premier League of professional soccer. So Barclays is unlikely to make business decisions based on goodwill alone, and certainly it does not base its activities on pity, either. What is my point? Simply that disabled people worldwide have become a formidable enough force that Barclays has decided to offer an investment to the public reflecting the one hundred publicly traded companies who best honor and serve them. On September 10 of last year, Barclays released to the investing public a new exchange-traded note based on the Return on Disability Index. Traded under the ticker symbol RODI, it is available using NYSE Arca, an electronic trading platform owned by the New York Stock Exchange and available through most brokerage firms and discount trading platforms.
The Return on Disability Indices were created by and are managed by Fifth Quadrant Analytics, based in the Greater New York City area. They have created an index of one hundred US-based companies, and another consisting of fifty companies based in Canada. According to Fifth Quadrant’s literature, these indices “are designed to capture the shareholder value creation indicated by publically traded firms acting in the global market of disability. Companies in the RODI are considered by Fifth Quadrant to be the top-ranked firms in disability with respect to creation of shareholder value.” A white paper published in the year 2012 by Fifth Quadrant puts this into plainer English: “A Market the Size of China representing a population of 1.1 billion people with disabilities (PWD) are an emerging market the size of China[sic]. Their friends and family add another 1.9 billion potential consumers that act on their emotional connection to PWD. Together, they control over $9 trillion in annual disposable income globally. Companies and governments seeking new ways to create value for stakeholders must begin acting to attract this newly unleashed cohort.” Bottom line: The world is beginning to recognize that disabled people have substantial buying power and earning power—enough to have a profound influence on global markets.
On Barclays’s website, one can gain some insight into how Fifth Quadrant screens the companies that are to comprise the Return on Disability Index: the index uses a quantitative ranking methodology to measure a company’s publicly-observable activities relating to people with disabilities across three key areas: talent, customer, and productivity. This ranking methodology focuses on elements that have the potential to increase shareholder value in a company, such as using best practices for attracting and hiring candidates with disabilities, focusing on “ease of use” features in products and services, and implementing productivity-focused process improvements driven by people with disabilities. The phrase “disability market” refers to the 1.3 billion people globally who face challenges across three general areas—dexterity, cognition, or sensory abilities—as well as their friends and family. The index notionally tracks the returns that may be available from investing in a basket of up to one hundred stocks that are selected pursuant to the Return on Disability® Binary Ranking (the "RoD Ranking"), and meet certain market capitalization, trading volume, and financial viability thresholds.
So which companies make up the RODI? At last report, Bloomberg cited firms covering a surprisingly wide array of industries. Represented in this index were firms such as Kimberly-Clark Corporation; Humana, Inc.; 3M Company; IBM; The Boeing Corporation; Bristol-Myers Squibb Company; Chevron Corporation; Capital One Financial Corporation; Stanley Black & Decker, Inc.; and even Carnival Corporation (operator of the cruise line).
Clearly enough evidence exists to make a strong case that disabled communities in the developed world have become a force to be reckoned with in both the marketplace and the workplace. But if you’re an investor considering the purchase of RODI as a component of your portfolio, is it a wise decision? This article is not meant to give an absolute answer to that question. What’s more, an absolute answer does not exist, since your tolerance for the risks associated with this kind of alternative investment will be different from your neighbor’s. But the following points are worth keeping in mind:
Investing in RODI is not the same as investing in stocks. While the RODI has been developed to track a basket of stocks from companies whose policies favor disabled consumers and employees, it is not possible for anyone to invest directly in this or any other index. The product Barclays has created for retail investors is an exchange-traded note (ETN) that really is structured more like a bond than like a stock. RODI was introduced to the public with a par value of $50 per unit, and it has a maturity date of September 17, 2024. What’s more, the value of an ETN depends somewhat on the health of the lending sector in the economy, not just on the fortune of the specific stocks which make up the basis of the underlying index. “ETNs can track the performance of anything from indexes to commodity futures to foreign currencies. In this way they resemble ETFs [exchange-traded funds]. However, while ETFs invest in securities to allow them to track the underlying benchmark, ETNs do not actually own what they are tracking. … The value of ETNs is determined by several factors. The two primary elements affecting ETN value are the performance of the underlying benchmark and the credit rating of the issuer. For example, if an ETN is tracking an index, and the index is staying level but the issuing bank's creditworthiness comes into question, the ETN would likely lose value.” The subtleties of ETN products lie far beyond the scope of this article, but before investing you should download and read the prospectus for RODI or any other ETN thoroughly before deciding to invest. Fact sheets and prospectus for all of Barclays’s BARX Investor Solutions ETNs can be downloaded as accessible PDFs from <http://www.etnplus.com/US/7/en/instruments.app>. Alternatively, the reader can phone Barclays’s Equity and Fund Structured Market Solutions hotline at (212) 528-7990 or send an email to <email@example.com>.
RODI is a very thinly traded product. This means that on most days, no one on the entire NYSE Arca platform is buying or selling this ETN at all. No trades whatsoever were made in February, March, and April of 2015. The official market price has gone up from the original $50-per-unit par value to $60.66 as I write this article on May 26, but no trades were made between May 11 and May 26, 2015. For this reason, in the event you should try to purchase it, it is most effective to put in a limit order—that is, specifying a particular number of shares that you are willing to purchase at a pre-stated maximum price. This makes it more likely the market will respond to you in a way you are prepared to live with.
As the owner of RODI or another semi-liquid issue like it, you might not be able to get out right away under terms that would make you happy. So don’t risk money that you know you may need to meet essential expenses in your life in the coming weeks. If you do, then you might be forced to sell out at a loss, depending on the mood of the market on the day you have to divest.
In the interest of full and fair disclosure, I mention that I work in the securities industry, serving as the registered representative of a nationally recognized broker/dealer. This means that I directly manage money for clients and have the ability to purchase, sell, and advise on stocks, bonds, mutual funds, annuities, and other instruments—including exchange-traded notes. As of this writing, I and one of my clients have purchased a combined total of 160 units in RODI, and we have no immediate plans to sell them. While I am invested both emotionally and financially in this product, I have been given no monetary incentive to purchase this note for myself or for any clients, and no one has solicited me to write this article or has paid me for doing so.Finally, keep in mind that neither the Return on Disability Index nor the exchange-traded note it inspired are focused specifically on blind people. Neither Fifth Quadrant Analytics nor Barclays Bank, PLC is committed specifically to the policies and programs of the National Federation of the Blind. So buying units of RODI surely is no replacement for contributing to your Federation’s state affiliate or for making regular payments into the Pre-Authorized Contribution plan. But it is an impressive way in which a huge, globally respected purveyor of investment and banking products has called the attention of the stock and bond investors to the growing influence of persons who live the life they want while dealing with significant challenges that involve dexterity, cognition, or sensory perception. Thank you to Barclays Bank, PLC, and its subsidiaries for recognizing that disability does not mean disempowerment and for presenting this truth to the marketplace.