DEFINITION of 'MSCI KLD 400 Social Index'

The MSCI KLD 400 Social Index, previously known as the Domini 400 Social Index, is a market cap weighted stock index of 400 publicly-traded companies that have met certain standards of social and environmental excellence. Potential candidates for this index will have positive records on issues such as employee and human relations, product safety, environmental safety, and corporate governance. Companies engaged in the business of alcohol, tobacco, firearms, gambling, nuclear power and military weapons are automatically excluded.

Founded in 1990 as the Domini 400 Social index, and renamed the MSCI KLD 400 Social Index in 2010, this index is one of the first Socially Responsible Investing (SRI) indexes, designed to help socially conscious investors weigh social and environmental factors in their investment choices.

BREAKING DOWN 'MSCI KLD 400 Social Index'

Socially responsible investing is a growing trend across many demographic and geographic areas, and having a social conscience may become a competitive advantage for corporations through their relationships with shareholders.

The index is independently maintained by research firm KLD Research & Analytics, and aims to maintain similar sector weights as the MSCI USA index, targeting at least 200 large- and mid-cap stocks in the S&P 500; 100 companies not in the S&P 500, but providing sector diversification and exceeding pre-determined market cap limitations; and 50 companies that have shown excellence in their social and environmental dealings.

Companies can be eliminated from the index on a quarterly basis if their Environmental, Social and Governance (ESG) ratings decline below certain standards, if they are removed from the MSCI USA IMI index, or if they no longer pass exclusion screens. They are then replaced by those with higher ESG scores to maintain the count of 400 securities. 

As of December 2017, the indexes' biggest holdings are Microsoft, Facebook, Google parent Alphabet, Procter & Gamble and Intel.

Since May 1994 through December 2017, the MSCI KLD 400 Social Index has returned 10.06% annualized, versus a 10% return in its benchmark MSCI USA IMI index. 

RELATED TERMS
  1. Socially Responsible Investment ...

    Socially responsible investing looks for investments that are ...
  2. Social Responsibility

    Social responsibility is the idea that a company should not just ...
  3. Social Sentiment Indicator

    A social sentiment indicator analyzes aggregated social media ...
  4. MSCI Inc

    MSCI Inc is an investment research firm that provides indices, ...
  5. Social Good

    A social good is an act that benefits the largest number of people ...
  6. Social Security

    Social Security is a part of a social insurance and welfare program ...
Related Articles
  1. Investing

    DSI: iShares MSCI KLD 400 Social ETF

    Find out about the iShares MSCI KLD 400 Social exchange-traded fund, and learn detailed information about its characteristics, suitability and recommendations.
  2. Investing

    3 Socially Responsible ETFs to Consider in 2016 (DSI, KLD)

    Get an insight into three of the top-performing ETFs in 2016 that are available to investors in the category of socially responsible investing.
  3. Managing Wealth

    Go Green With Socially Responsible Investing

    Find out how morals and ethics can bring you a surprising return.
  4. Investing

    The Value in Socially Responsible Investing

    Socially responsible investing has been growing in popularity. Discover if it's the right strategy for you.
  5. Investing

    Due Diligence Needed in Socially Responsible Investing

    Socially responsible investing can be a worthwhile endeavor for many investors, but it may take a little more work.
  6. Small Business

    Social Media: High Risk, High Potential Returns

    Carefully selecting social media ETFs can provide you with the opportunity to diversify your portfolio and enjoy financial rewards due to user growth.
  7. Retirement

    Will My Social Security Benefits Be Taxed?

    If, and how much, your social security benefits are taxed depends on your income and where you live.
  8. Managing Wealth

    How Social Impact Bonds Work

    Social impact bonds are one way to funnel money to projects that will impact society.
  9. Investing

    A Responsible Way to Solid EM Returns

    Applying environmental, social and governance investing to emerging markets can work for investors.
  10. Retirement

    Introduction to Social Security

    You've probably contributed to this fund, but will you reap the benefits? Find out here.
Trading Center