Invest in your values
How can a small investor empower change and impact the world we live in for our children?
In the past, it was virtually impossible for everyday investors to apply their beliefs and values to their portfolios. Now they can. Sustainable Portfolios have been around for a number of years and now, more than ever, are entering centre stage as more people want to show their commitment to positive environmental and social changes.
When you invest in Sustainable Portfolios, you are really making a stand toward global responsibility and environmental change. So, what are they? Offered mainly at large investment firms, a Sustainable Portfolio would include a guided stock portfolio of proven high-quality companies that demonstrate superior corporate governance, business ethics, labour and human rights standards, as well as responsible actions toward climate change, water management and pollution.
If you are thinking of changing your portfolio to hold more environmentally sustainable options, be sure to do your research.
Not all investment firms hold a socially responsible platform and many are still not forward thinking when it comes to global change.
It should be something your financial planner takes very seriously and not used as a sales ploy to get your assets on the books.
Most large brokerages that believe in the value of Sustainable Portfolios will have an A+ rating by the UN Principles for Responsible Investments and will provide investors with a framework and product offering for a wider impact and active management philosophy.
Ask about the firm's assets under management in this sector — it should be at least $2 billion to $5 billion if they are serious and committed to advancing the options for Canadians to invest.
Portfolios should always be actively managed from both a top-down and bottom-up perspective and evaluated using macroeconomic and geopolitical factors, trends and with specific selection processes in place.
Short- and long-term risks should always be mitigated in the fund analysis to ensure strong portfolio returns.
For those who wish to enhance their existing portfolio with a small portion of sustainable stock options, many can choose from a variety of mutual funds (MF) or exchange traded funds (ETF).
These are generally always actively managed funds with many offering downside protection, risk control, flexibility and the potential to outperform the market.
Talk to your adviser. Do your homework, always be well diversified when investing, and why not consider a higher standard to your stock selection this year, to create a better world for us all?