Head of Social Impact Investing Lloyd Kurtz addresses investor questions about social impact investing.
Note: Please select full screen option to view on iPad.
Presenter: Lloyd Kurtz, Head of Social Impact Investing, Wells Fargo Private Bank
Over the past twenty years, we've seen big changes in the investment industry. One of the most significant has been the growth of social impact investing, which now has really become a global phenomenon. And as more socially-conscious investors get involved, we see impact investing evolving in different directions to meet the financial needs of these investors. Today we work with individuals, foundations and endowments, family offices, and religious institutions, focusing on how we can help them align their investment portfolios with values that are important to them, such as education or their communities.
At the same time, we often hear questions: Will my portfolio returns suffer? What are my choices? Do I have enough to invest?
Title card: Will my portfolio returns suffer?
We often get asked whether performance is going to be negatively affected by using a social impact investing theme versus a mainstream investment strategy. Of course, all investing involves risk, and a social policy could cause a portfolio to forego opportunities to gain exposure to certain industries, companies, sectors or regions of the economy which could affect portfolio performance. But most long-term studies, such as our Journal of Investing paper, have shown responsible investment strategies perform competitively on a risk-adjusted basis. In our own work, we've found that the social or sustainability parameters are not major performance drivers, positive or negative. The real drivers of portfolio performance are the same as for any investment portfolio – how much risk are you taking, is the portfolio well-diversified, are there good risk management practices in place?
Title card: What are my choices?
Today there are plenty of social impact investment choices, so it is relatively easy to find one based on what's important to you. For example, at Wells Fargo we've worked hard to develop a range of options for investors, including strategies focused on sustainability, animal welfare, and a variety of faith-based concerns. These strategies incorporate a full assessment of environmental, social, and governance factors.
Title card: Do I have enough to invest?
Some investors think good responsible investment choices are only available to high-net-worth investors, or worry that their only choice will be a socially responsible packaged product that may not be a good fit for them. This is a misconception. For example, Wells Fargo's Social Impact Investing strategies are now available through a wide variety of separately managed accounts, making them accessible to virtually all investors.
For those of you who care deeply not only about financial return but also about where your money goes and how it's used, it's now easier to invest according to your values than ever has been before. To learn more, download a copy of our special report.______________________________________________________________________________
Sources: Kurtz, Lloyd, and Dan diBartolomeo. “The Long-Term Performance of a Social Investment Universe.” Journal of Investing, 2011.
“Answers to Four Questions”, Lloyd Kurtz, Journal of Investing, Fall 2005.
Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and its various subsidiaries and affiliates.
Wells Fargo Bank, N.A. (the “Bank”) offers various advisory and fiduciary products and services. Wells Fargo affiliates, including Financial Advisors of Wells Fargo Advisors, LLC, a separate non-Bank affiliate, may be paid an ongoing or one-time referral fee in relation to clients referred to the Bank. The role of the Financial Advisor with respect to Bank products and services is limited to referral and relationship management services. The Bank if responsible for the day-to-day management of the account and for providing investment advice, investment management services and wealth management services to clients. The views, opinions and portfolios may differ from our broker dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliate of Wells Fargo & Company.
This information is for educational purposes only and should not be used or construed as financial advice, an offer to sell, a solicitation of an offer to buy, or a recommendation for any security. Wells Fargo does not guarantee that the information supplied is complete or timely, undertake to advise you of any change in its opinion, or make any guarantees of future results obtained from its use.
Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company.
© 2016 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. CAR-0716-04636