Responsible Investing
Are you curious about or have a more specific interest in responsible investing? Towerpoint Wealth has the resources, expertise, and experience to help you properly construct your investment portfolio to reflect your personal values, without compromising your ability to have a diversified portfolio earning competitive returns.
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What is Responsible Investing?
Responsible investing is any investment strategy which seeks to consider both financial return and social/environmental good to bring about a positive change.
Responsible investing adds a personal, values-based layer to traditional investing. Consequently, responsible investing may have a unique meaning for each individual. And coupled with the fact that responsible investing is still in its relative infancy, there is a widespread lack of clarity regarding not only what meets the criteria for responsible investing, but even what to call it!
For example, responsible investing may also be known as socially responsible investing, ESG (environmental, social, and governance) investing, impact investing, mission-based investing, socially conscious investing, sustainable investing, or even green investing.
Regardless of the terminology used, responsible investing is about providing YOU with an additional voice to select (or avoid) investments that are not aligned with your personal values – whether environmental, political, social, etc.
What are Some Types of Responsible Investing?
The most common form of responsible investing is exclusionary (negative screening), using screens to “weed out” companies with questionable environmental and social policies. This may include companies that are involved in gambling, fossil-fuels, tobacco, alcohol, military equipment, nuclear energy, or that have poor labor records.
In contrast to exclusionary screening, responsible investing may also focus on inclusionary (postive screening). For example, companies that have strong environmental impact performance records, utilize renewable energy, or that foster diversity and equal pay.
Finally, impact investing generally takes inclusionary investing a step further and places even further emphasis on the social/environmental impact as compared to financial return.
Should I Consider Responsible Investing?
This is a personal decision, based on your individual values and beliefs.
And while it can be difficult for responsible investing to be as directly impactful as more traditional charitable giving strategies, it does provide a way for your investment portfolio to better reflect your personal values and at the same time, keep you on track to achieve your financial goals and objectives.
At Towerpoint Wealth, we are a legal fiduciary to you, and always work 100% in your best interests. We are here to serve you, our client, and will strive to match your personal values with your investment portfolio should this be important to you.
What is Towerpoint Wealth’s approach?
We understand that responsible investing is personalized, which is why we have sourced several unique options.
We can recommend responsible investing-based substitutes for each individual investment in your portfolio on a case-by-case basis.
For example, if you want to replace one of your current U.S. stock investments with one that has a responsible investing focus, we can do so while keeping the risk and return characteristics of your overall portfolio consistent with our optimized target (model) portfolios.
See our Investment Strategy page for additional information about our target portfolios.
We can invest your portfolio completely in responsible investing-based investments.
For each of our target portfolios, we have created responsible investing-based equivalents with comparable risk and return characteristics.
*All responsible investing-based investments on our platform adhere to the same rigorous selection process as those in our target portfolios. Information on our Investment Selection Process can be found on our Investment Strategy page.
Will My Performance Suffer?
Investment performance is the most common concern for our clients considering responsible investing.
And while there have been numerous studies attempting to quantify whether responsible investing positively or negatively impacts performance, the results are inconclusive. And further, given the plethora of responsible investing options across different asset categories and asset managers, a blanket statement regarding how responsible investing impacts investment performance may be misleading to you.
Even with these caveats, we do feel there can be merit to a social/environmental investment focus, providing the foundation to positively impact investment performance. For example, a company that meets one or several of the criteria for responsible investing may focus on long-term goals rather than quarterly profits, which can promote a stronger long-term growth trajectory for the company. Or, a company that focuses on equal pay may have a more stable workforce.
Example Components of Towerpoint Wealth Responsible Investment Portfolio*
Crossmark Steward Sm/Mid Cap Enhanced Index Fund (SCECX)
- Actively managed, values-based index fund seeking to exceed the performance of its benchmark index (S&P 1000 Index) using the following technique by tactically adjusting the funds weighting of growth versus value style securities, based on future market expectations. Utilizes a computer-aided, quantitative analysis of valuation, growth, dividend yield and other factors to compensate for the exclusion of certain securities.
- The fund adheres to a values-based investment mandate with an Environmental, Social, and Governance (ESG) focus by avoiding investing in companies linked/involved with mature content, life ethics, alcohol, gambling or tobacco, on a best efforts basis.
Calvert Bond Fund (CBDIX)
- Actively managed, responsible investing fund seeking to exceed the performance of its benchmark index (Bloomberg Barclays U.S. Aggregate Bond Index). The Fund primarily invests in bonds issued by the following: U.S. Corporations, The U.S. Government or its agencies, U.S. government-sponsored enterprises (GSEs), and Trust preferred securities, taxable municipal obligations and loans, occasionally.
- The Fund adheres to the responsible investing guidelines outlines in The Calvert Principles for Responsible Investment, which calls for ESG factors to be considered during the investment selection process.
Morgan Stanley Inst US Real Estate Fund (MSUSX)
- Actively managed fund seeking to exceed the performance of its benchmark index (MSCI ACWI Index). The Fund invests 80% of its assets in equity securities of companies in the U.S. real estate industry.
- The Fund’s advisor will consider ESG factors during its bottom-up stock selection process, and may engage company management regarding their corporate governance practices, when needed, should the Fund’s Advisor determine the company is facing materially important environmental and/or social issues.
ETHIC – Customized Responsible Investing Solution
- Towerpoint Wealth is excited to partner with Ethic Investments to custom tailor a portfolio aligned with your values.
- Through a collaborative conversation with your Towerpoint Wealth advisor and Ethic, your portfolio will be carefully constructed to invest in specific securities consistent with your values and with the Towerpoint Wealth Sustainability Pillars.
- Our partnership with Ethic allows us to utilize a variety of socially responsible screens and integrations, perform an ESG portfolio x-ray, and analyze the “clean” and “dirty” components of any portfolio.
*The investments described within this section should not be construed as specific recommendations, and are not necessarily a representation of Towerpoint Wealth’s approved investments.
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