ESG Investing is Popular…But Is It Profitable?

Socially responsible investing has continued to grow in popularity. Can you still make strong returns while avoiding certain companies that don’t share your environmental, social and corporate governance beliefs? Vice President Steven Johnson outlined our view on ESG investing during our recent webinar, DiversificationA strategy for managing investment risk by investing in a mixture of different investments. Since different asset classes face different risks, even if one type of asset declines in value, others may not. Is Dead…and Other Modern Myths.*

Please enjoy the excerpt below and click here for the full webinar replay with more informed insights you can use. 

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Steve Johnson:

One of the best things about being an investor recently has to do with democratization. Investors have so many choices today: you can  invest in what you like, where your passion lies and what your interests are. And one of the ways to do that is through ESG investing.

ESG investing has gained a lot of steam over the last couple of years, but it’s been around for quite some time. It’s investing by doing good. Investing in those companies that care about the environment, that care about social issues, that worry about corporate governance. This is a movement. It’s all part of the larger socially responsible investing (SRI) trend. Things like electric vehicles, cannabis, a bunch of different areas people are passionate about—now you have access to these investments.

We have embraced this type of investing here at Adviser Investments, and we have the ability to offer ESG portfolios to clients. We go through a rigorous process. We look at the ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. and different funds that have socially responsible goals. We screen them and then build you a diversified portfolio consisting of large, small and midsize companies as well as international firms. We can even provide bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. ETFs that have a sustainability focus. Over the next five to ten years, these types of investments and strategies will gain even further credence.  We would encourage interested investors to keep investigating and following their passion with ESG.

Click here for a replay of Diversification Is Dead…and Other Modern Myths. Please contact us at (800) 492-6868 to learn more about comprehensive wealth management solutions.