Investor Education | Finding the investment high ground

Believe it or not, it is possible to reap rewards from your investments while accomplishing a sound environmental, ethical or socially conscious objective. This concept of “socially responsible and sustainable investing” (SRI) is taking hold with many investors around the country. According to The Forum for Sustainable and Responsible Investment (US SIF), in 2014 a staggering estimated $6.57 trillion or more was being invested based on SRI strategies.

SRI goes by several other names. It has also been referred to as “community investing,” “ethical investing,” “green investing” and “sustainable investing,” just to name a few. Regardless of the terminology, similar strategies are employed. Historically, there are two main areas of focus:

1. ESG incorporation: This is the incorporating of environmental, social and governance (ESC) factors in investment analysis and portfolio development across a range of asset classes. For instance, one significant segment of ESG, social investing, is dedicated to financing projects or institutions designed to help struggling communities both here and overseas.

2. Shareholder resolutions: For investors holding shares in publicly traded companies, shareholder resolutions can embrace SRI strategies. Investments may be coordinated to encourage responsible business practices and to allocate capital for social and environmental benefits across various economic strata.

The list of SRI investors is extensive, covering a broad spectrum of individuals, educational institutions, private foundations; family offices, pension funds, religious institutions and a plethora of nonprofit organizations. There are literally hundreds of firms offering SRI options to these investors.

One of the fastest-growing segments within the ESG category is investment in mutual funds. The number of ESG mutual funds in the United States has reached almost 500, with collective assets close to $2 trillion, according to the US SIF. Alternative investments are also showing sustained growth. This includes social venture capital, double or triple bottom line private equity, hedge funds and property funds.

SRI is not for everyone, but you may want to learn more about the available options. Be mindful that this does not have to be an all-or-nothing proposition—you can devote as little or as much of your portfolio to SRI as you’d like. Do not hesitate to ask for assistance in this area.

This newsletter/advertisement is produced for our clients, friends and associates through an arrangement with WPI Communications, Inc. for the representatives’ use. Although the editorial content is professionally researched, written and edited, neither our firm nor any of its agents, representatives or associates make any representations regarding the accuracy of the content or its applicability to your situation. The information in this communication is not intended as tax or legal advice. In accordance with IRS Circular 230, the information provided herein may not be relied on for purposes of avoiding any federal tax penalties. Any tax advice contained in the body of this material was not intended or written to be used, and cannot be used, by the recipient for the purpose of 1) avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, or 2) promoting, marketing or recommending to another party any transaction or matter addressed herein. You are encouraged to seek tax or legal advice from an independent advisor.

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