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Socially Responsible Investing with ESG Portfolios

Socially Responsible Investing with ESG Portfolios

| September 08, 2020
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Can your money "Do Good by Doing Good?" At BMG, we think so.

It’s not a secret that investors seek positive returns from their investments. However, some desire to also make a positive impact on the world. That's where the terms "Socially Responsible Investing" and "Impact Investing" come in. This type of investing isn’t a new idea. If you haven’t heard the term much, chances are good that you will. From humble beginnings in 1971 with one fund, sustainable investing now accounts for over a quarter of all professionally managed assets in the United States.

Also known as ESG investing, Sustainable investing is focused on three goals: Environmental, Social, and Governance.

  • Environmental is perhaps the most well known. It addresses carbon/greenhouse gas emissions, energy management, water scarcity, and the environmental impact of products as well as supply chain.
  • Social covers workplace diversity, safety, and quality while also addressing privacy and data security.
  • Governance looks at corporate board structure and diversity, accounting, and executive compensation.

By investing in an ESG strategy you become part of a team wholly focused on using the power of money for positive change. One of the most exciting methods is through shareholder engagement. ESG fund managers use their power to work directly with companies to change their practices, whether that is increasing diversity, using less water or energy to manufacture products, or creating a safer work environment for employees. "Yeah, but what does this mean?" In layman's terms, ESG funds pool peoples' money together, (perhaps even yours and mine) and buy enough of a company's shares that they can "throw their weight around" on behalf of all of us. This happens all the time in the business world, but when it's an ESG fund, that "weight" is helping to hold companies accountable to things other than just the bottom line. In my opinion, pretty cool...

While past performance is no guarantee of future returns, the results are not surprising when you think about them. Companies that have a focus on ESG have shown a competitive advantage. Looking at data ending on 9/30/19, some ESG funds had outperformed the Russell 1000 Index on the 1,3,5, and 10 year time-frames. BMG Advisors is excited to be a part of this positive change. We now offer a full range of ESG strategies to help clients.

Our unofficial, 'internal'  motto is "Do Good by Doing Good" and this is just another way we seek to help clients pursue their goals and make a difference. Our team would love the opportunity to assist you in any way. If you want to learn more about how BMG can help you use your money to have a positive impact on the world, we're ready for you. Our contact page is right here.

Sources:

Morningstar.com, Calvert Funds.

Disclosure: 

Investing in mutual funds involves risk, including loss of principal. Fund value will fluctuate with market conditions and it may not achieve its investment objective.

The Russell 1000 Index consists of the 1,000 largest securities in the Russell 3000 Index, which represents approximately 90% of the total market capitalization of the Russell 3000 Index. It is a large cap, market-oriented index and it is highly correlated with the S&P 500 Index. 

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