4 Myths of Sustainable Investing (video)

January 31, 2017

Most investors today are interested sustainable responsible impact investing (SRI). But they let common misconceptions hold them back.

They’re still thinking about the way sustainable investing used to be. They don’t realize how much has changed.

Sustainable investing has really evolved since we first started managing sustainable portfolios for clients more than 20 years ago, and it’s time to rethink your assumptions about SRI.

Start by checking out these 4 myths.

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Summary:

If you think that sustainable investing is a niche industry that invests in small, environmentally friendly companies, think again.

Sustainable investing is now mainstream. It’s one of the fastest growing areas of the fund industry. There are now hundreds of funds that invest in all kinds of companies, including large multinational corporations.

And if you still think investing in a sustainable way hurts returns, you haven’t kept up on the latest studies that show that these portfolios perform just as well as conventional ones.

Don’t miss out on the many new opportunities in sustainable investing. Get the facts, and start looking at how you can invest today for a better tomorrow.

Full transcript:

Sustainable responsible impact investing (SRI) is getting more attention as an effective way to improve our world and grow our portfolios.  Total assets increased by a third in the last 2 years to $9 trillion in the US.

Yet some investors still think about the way sustainable investing USED to be. Impact funds have really evolved since we began using them 20 years ago.  It’s time to rethink old assumptions.

Myth #1: Many think SRI funds are just a small part of the market, and it would limit their choices.

The fact is, SRI funds are one of the fastest growing fund areas, with hundreds now available.   They cover most of the market and the world, including large-cap and small-cap, growth and value, domestic and foreign funds. Some SRI funds are diversified, and others more concentrated.

This is no longer a niche industry. It’s really gone mainstream.

Myth #2: SRI funds are mainly invested in small environmentally friendly companies.

In fact, SRI funds invest in all kinds of companies, including large multinationals.  80% of companies in the S&P 500 now publish sustainability reports. That’s a big change!

Myth #3: SRI funds only do well in certain markets.

The reality is that SRI funds participate in the same market trends as other funds. When growth is in favor, growth-focused SRI funds  typically outperform.  When U.S. markets are leading, domestic SRI funds are usually the place to be. This means that you can capitalize on these trends.

That’s what our Upgrading strategy is all about. For instance when mid-caps were in favor a few years ago, we owned Ariel, a mid-cap fund that excludes tobacco and hand guns.

When the trend favored large caps, we bought large-cap Domini Social, which screens companies based on their social and environmental impact. In 2016, higher quality stocks did well.  We bought into Parnassus Endeavor, which owns high quality companies that are great places to work.

Myth #4: And here’s the big myth about SRI: that it doesn’t perform well.

This has been repeatedly debunked. SRI portfolios perform just as well as conventional ones. There’ve been more than 2,000 studies since the ‘70s, and a review of this data found a positive link between sustainability factors and good financial performance.

This is consistent with our own 20-year experience managing client portfolios.

So don’t let the old way of thinking about sustainable investing hold you back. Get the facts, and start looking at how you can invest today for a better tomorrow.

Thanks for watching.

 

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