Leading the Way Forward

Thought Leadership from the SRI Community

Optimized SRI Index Funds: Seeking Impact and Returns

Index funds are increasingly embraced by investors seeking market-based returns at relatively lower costs than actively managed funds. Even within the specialized field of socially responsible and ESG-driven mutual funds, investors are turning to indexes for their consistent performance and as a platform for the integration of a full range of impact investing strategies. We anticipate this trend will continue, and even increase, as investors understand that they can responsibly integrate their values into their investment portfolios. SRI index funds use several different approaches – an optimized SRI index fund blends the benefits of market index funds with making a positive impact. Optimized index funds seek to track the returns of a public benchmark index within a narrow range, while not using all of the constituents of the index. For socially targeted funds, this is typically done by applying a set of exclusionary screens such as companies affiliated with gambling, tobacco, or weapons production. Fund managers may also exclude companies on the basis of environmental, social, and governance (ESG) factors.
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Are Your Clients ESG Investors? Looking past stereotypes to understand who are today’s ESG investors.

Sustainable investing—the use of environmental, social, and governance (ESG) factors to assess investing alternatives—is gaining momentum across the industry. Although most advisors are aware of this development, many still struggle to apply it in practice. Often, the chief obstacle to discussing sustainable investing with clients is uncertainty about which ones might be interested. This may prompt advisors to rely on common stereotypes that assume sustainable investing is a concern of only millennials and women—but our research shows that the true face of sustainable investing is much more diverse.
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Plan for Tomorrow by Supporting Vulnerable Communities Today

Recycle? Check! Reduce energy use? Check! Skip the straw? Check! Divest from fossil fuel companies? Check! Support vulnerable communities currently bearing the brunt of the environmental damage? *Crickets* Temperatures are increasing, ice sheets are melting, and sea levels are rapidly rising. Scientists have been sounding the alarm for decades. With youth-led climate strikes gaining attention in 2019, a broader group of Americans are acknowledging how our actions have affected the home future generations will inherit. We are in crisis mode and need to protect our tomorrow. But in our efforts to protect tomorrow, we need to make sure to support the people and communities affected today.
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An interview with Gary White and Matt Damon – Cofounders of WaterEquity and Water.org

The SRI Conference is proud to have Gary White kicking off the SRI Conference main stage on November 13, 2019 at The Broadmoor in Colorado Springs. Gary co-founded Water.org and WaterEquity with Matt Damon, and we sat down for an interview with both of them to learn more about the origins of both organizations, the challenges and opportunities in their work, and how more investors can get involved in addressing water scarcity. The SRI Conference: How did you meet Gary and get involved in the issue?
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Small Cap ESG Value as an Alternative to Private Equity Impact Investing

Private equity investing is often described as a superior alternative to public equity investing with studies citing private equity’s historical outperformance vis-a-vis the S&P 500 Index. However, these studies frequently do not adjust for issues such as 1) appropriate benchmark selection, 2) current market valuations, 3) illiquidity, and 4) high fees. Additionally, when studies have examined the performance of impact investing private equity, historic returns have actually underperformed S&P 500 index. For these reasons, we believe that a small cap1 public equity strategy with value and ESG integration may be a viable alternative to private equity investing particularly when it comes to the area of private equity impact investing.
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