When I think about Memorial Day, I think about veterans. When I think about veterans, I think about the horrors of war. When I think about the horrors or war, I think about human rights violations. When I think about human rights violations, I think about socially conscious investing.
Socially conscious investing is not just for the environmentally conscious hipster that separates their recyclables from their trash. It is also for those who protest sweatshops, big oil or tobacco, just to name a few, and want to make a statement through their investing.
Socially conscious investing is basically when you take your beliefs and values and apply them to how you invest your money. Socially conscious investors screen companies and mutual funds for those that conflict with their values. For instance, some will not invest in companies that damage the environment, use monkeys in research or rely on our vices ( tobacco, gambling and alcohol) to make a profit.
Some conscious investors will screen for causes like equal opportunity employment or animal rights. Catholics, Lutherans and Muslims have their own mutual funds that will follow a set doctrine based on their religious beliefs.
When I first started out as a financial adviser years ago, there were very few mutual fund choices for the socially conscious, now there are many. So, you are probably wondering if socially conscious investing really makes a difference? In 1999, one out of every $8 invested in stocks was prompted by a socially conscious decision. That amounted to around $2.16 trillion of the $16.3 trillion professionally managed investments in the U.S. That figure was up a whopping 84 percent from 1997. Impressive, considering that in 1984, there was only around $40 billion in socially conscious investments. While the precise demographics of the socially conscious investor are not readily available, there are some patterns. Those individuals inclined to invest on a personal level with an emphasis on social issues are the baby boomers who have an affinity for social awareness, women and minorities.
I know that you might be thinking that making a statement through investing sounds like a good idea, but will I make a profit or just feel good about myself? With the increasing availability of funds or ETFs that have a socially conscious objective, the overall performance is competitive with funds without social restrictions. The answer is both, so you may want to consider socially conscious investing for a portion of your portfolio. This may be one way to feel good about your values and well as your returns.
I hope everyone enjoys the holiday weekend, but keep in mind that it was the sacrifices of others that safeguards our freedom.
If you would like to learn more about socially responsible investing and what choices you have to speak up from your pocketbook, give us a call at 841-4277 or email at carol.perry@lpl.com.
• Carol Perry, of Carol Perry and Associates, has been a resident of Northern Nevada since 1983.