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. Social Responsibility

    The idea that a company should embrace its social responsibilities ...
  2. Social Good

    A social good is an act that benefits the largest number of people ...
  3. Social Impact Bond - SIB

    A social impact bond is a contract with the public sector or ...
  4. Social Sentiment Indicator

    A measurement based on aggregated social media data that helps ...
  5. Social Security

    Social Security is a part of a social insurance and welfare program ...
  6. MSCI ACWI - All Country World Index

    The MSCI ACWI is a market capitalization weighted index designed ...
Related Articles
  1. Investing

    Does Mixing Faith and Finances Work in Investing?

    Biblically responsible investing can help you maintain your beliefs while increasing your net worth.
  2. Investing

    Top 5 ETFs for Impact Investing in 2018

    The top five ETFs for impact investing by assets under management.
  3. Managing Wealth

    Go Green With Socially Responsible Investing

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

    Will the Social Security Cap Increase Help It Last Longer?

    The Social Security cap increase will be 7% in 2017, but even that may not be enough to keep Social Security from running out of funds.
  5. Investing

    A Seasoned Vet Among ESG ETFs

    This old fund allows investors to assess the merits of environmental, social and governance investing.
  6. Investing

    Four Socially Responsible Stocks To Watch

    Making money in the market shouldn't prevent you from sleeping at night. Find out how to keep your conscience clean and bank account growing.
  7. Financial Advisor

    Talking to Clients About Socially Responsible Investing

    Many clients are asking their advisors about socially responsible investing options. Here are some of the questions advisors should be ready to answer.
  8. Financial Advisor

    Explaining ESG, SRI & Impact Investing to Clients

    There are distinct differences between ESG, SRI and impact investing that clients should understand.
  9. 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.
  10. Retirement

    How to Fix an Error on Your Social Security Check

    For many seniors, social security benefits checks are their income stream which means the benefit has to be correct. If you spot an error, you can fix it.
RELATED FAQS
  1. What is the Social Security administration responsible for?

    Learn about the Social Security Administration's main responsibilities along with its history, structure and social safety ... Read Answer >>
Hot Definitions
  1. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  2. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  3. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  4. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  5. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  6. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
Trading Center