13 Jul 2016
What is it and should you do it?
Years ago, “Impact Investing” was referred to as “Socially Responsible” and over the years has become very popular. There are two questions with this type of investing:
1) Should you invest?
2) Will you make money?
Let’s look at some statistics to help you decide:
• In 2005, there were about 200 such investment vehicles, less than a decade later, that number jumped to nearly 1,000! More is not necessarily better by the way.
• Impact investing has actually outgained the S&P 500 during a 25-year period. From 1990-2014 the Domini 400 (benchmark index for socially responsible sector) yielded an average total return of 10.46% compared to 9.93% S&P return during the same time
• It’s hard to be 100% socially responsible so don’t expect perfection when you invest
• One out of every sixth invested dollar in America is held in a socially responsible investment strategy
So, the number are compelling. Should you invest? If you are inclined ethically and morally, I see no big concerns. Will you make money? Over the long term this type of strategy appears to be productive but, you should always invest for your unique investment goals, concerns and risk levels (like any investment). If interested please make sure you discuss the pros and cons with your investment professional before you invest!
Good luck! Jeff
Indices mentioned are unmanaged and cannot be invested into directly. Past performance is not a guarantee of future results. Investing involves risk. Depending on the different types of investments, there may be varying degrees of risk. Socially responsible investing does not guarantee any amount of success. Clients and prospective clients should be prepared to bear investment loss including loss of original principal.