More investors than ever are looking beyond the bottom line. Socially responsible investing (SRI), environmental, social, and governance (ESG) investing, and impact investing have all gained significant traction in recent years.
What Is Socially Responsible Investing?
At its core, socially responsible investing means aligning your portfolio with your values. This can take many forms: avoiding companies involved in tobacco, weapons, or fossil fuels; actively seeking out companies with strong environmental practices; or investing in funds focused on social impact.
The Performance Question
One of the biggest myths about values-based investing is that you have to sacrifice returns. Research from Morgan Stanley and other firms has consistently shown that sustainable funds have performed on par with — and in some cases better than — traditional funds.
Getting Started
- Define your values: What issues matter most to you? Climate change? Social justice? Corporate governance?
- Research your options: Many mutual funds and ETFs now focus on ESG criteria.
- Look beyond labels: Not all "ESG" funds are created equal. Dig into the holdings to make sure they truly align with your goals.
- Work with an advisor: A financial professional can help you build a diversified portfolio that reflects both your values and your financial objectives.
Investing with your heart doesn't mean investing without your head. With the right approach, you can pursue competitive returns while making a positive impact on the world.
Content Disclaimer: Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.