Sustainable portfolios consider moral values in addition to conventional considerations such as risk, return, cost, and tax efficiency. This is accomplished with ESG screening, an acronym for Environmental, Social, and Governance.
Sustainable investing means different things to different people. We help investors avoid controversies such as weapons, racism, and fossil fuels, as well as tilting towards companies that treat employees, society, and the planet better than average. The result is a portfolio that not only performs well, but one that also creates impact that can be measured, quantified, and reported to shareholders.
PASSIVE - avoid emotionally fueled trading represented by market timing guesswork. Most fund managers can't beat their benchmarks over time, so what makes us any better? Instead, we employ a rules-based rebalancing process designed to maximize returns for a given level of risk.
LOW COST - seek investments with lower than average costs, usually index funds. Most of our new clients come to us with expensive, chronically underperforming mutual funds. Our recommended strategies are generally much lower cost than what our new clients originally come to us with.
TAX EFFICIENT - index funds, ETFs, and individual stocks are often more efficient than conventional mutual funds because fund managers actively trade positions inside their funds. This generates additional taxation in the form of a year end dividend representing capital gains, which is an additional drag on an investor's total return.
Tell us what's important to you. For example, are you a planet defender? What about empowered woman? Love animals? What are you feelings towards corporate political contributions?
Our software helps clients understand what they own and where improvement can be found. With data sourced from NGO watchdog groups, government stats, academia, and the SEC, portfolios are measured based on 49 different screening factors and summarized into 5 main impact themes.
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This stock-based model is represented by 7 different index funds from fund families such as Impax Asset Management, Nuveen, Etho Capital, Impact Shares, and iShares.
Negative screens eliminate guns, tobacco, controversial weapons, GMOs, and adult entertainment. Positive screens result in companies with lower than average carbon intensities while emphasizing workforce diversity, equitable supply chain practices, fair accounting, and a commitment to the United Nations Sustainability Development goals.
This portfolio model closely tracks the global benchmark so investors should expect returns aligned with the market. To mitigate risk, corporate, treasury, and green bond funds are spliced in to complete the portfolio.
This stock-based model with an emphasis on alternative energy is represented by 6 different index funds from fund families such as Green Century, Change Finance, SPDR, Nuveen, Etho Capital, and Invesco.
At a minimum, screening eliminates coal, oil, & natural gas reserves from the portfolio. Most of the funds go beyond that by also eliminating the energy & utility sectors. The outcome is a portfolio with a 53% reduction in carbon intensity compared to the benchmark*.
To mitigate risk, treasury and green bond funds are spliced in to complete the portfolio.
* Source: Morningstar Advisor Workstation, Jan 2021
This portfolio option allows clients to be as granular as possible with their impact goals. Portfolios are 100 to 250 stocks, screened for commitments to the UN's Sustainable Development Goals as well as impact themes such as low carbon, human/labor rights, weapons, or fossil fuels.
In addition, portfolios can be tilted towards factors such as Value, Yield, Momentum, Low Volatility, and Quality. Because there are over 100 positions, the ability to capture losses for tax purposes potentially exceeds the same benefit in a portfolio built with funds.
To mitigate risk, corporate, treasury, & green bond ETFs are spliced in to complete the portfolio.