Front Range Financial Consulting

It could be that those images of large chunks of Antarctic ice floating free into the warming oceans are having an effect on the world of investments. Add the multiple effects of visible climate change, the growing global concern about the future of energy and the maturing of the concept, and you can understand why incorporating a sense of social and environmental responsibility into portfolio choices is a hot trend.

Actually, very hot, according to new figures included in the Report on Socially Responsible Investing Trends in the United States, published in March by the nonprofit Social Investment Forum. Socially responsible investment (SRI) assets rose 324% (to $2.71 trillion in 2007) since the first such report ($639 billion in 1995), while assets under professional management generally increased just 260% over the same period. From 2005 through 2007, the SRI asset total moved up more than 18% while assets in the general investing universe rose just 3%. This means that approximately $1 out of every $9 invested and 11% of total U.S. investments are in the SRI category.

Incorporating moral and social concerns into investment choices isn’t a new idea. You may have read that in the mid-18th century Quakers in Pennsylvania were told not to invest in anything tainted by slavery. These days, there are numerous reasons for SRI choices. Investors are concerned about everything from animal welfare to aspects of the environment, from social vices and diversity to product safety and impact – alcohol, gambling, tobacco, weapons, employment practices, human rights, global warming and ethics in corporate governance.

Beyond investing in the stocks of firms screened to conform to the investor’s ideals, 260 mutual funds, several exchange-traded funds, some closed-end funds and other products are also available for SRI. Socially and environmentally screened separate accounts appeal to high-net-worth clients, and funds in such accounts increased dramatically – from $17.3 billion in assets in 2005 to $39.5 billion in 2007.

You may have at one time considered SRI investing a fringe activity that produced inferior financial returns. Once upon a time, that may have been the case, but those days belong to the past. If you have questions about how to invest wisely while still pursuing your socially responsible goals, please don’t hesitate to call us.