What Makes An Investment Socially Responsible? Louis Berger Co-Founder & Principal Washington Square Capital Management Email: louis.berger@wsqcapital.com Twitter: @louisberger Young Jain Professionals -- July 10, 2014 www.wsqcapital.com 1
About Us We are an independent investment advisory firm based in New York, NY. We offer three core services to our individual and corporate clients: Investment Management Financial Planning/Wealth Management Pension or Benefits Consulting We invest across the world and have access to both domestic and international markets through our relationships with a number of competing global securities firms. All client assets are held with outside, nationally recognized custodians in separate accounts. A number of our clients seek to maximize both the financial return and social good of their investment portfolios. All of our offerings are available with a socially responsible investment overlay. We've built WSQ Capital to be an advisor unequivocally allied with our clients and independent of larger brokerage or investment banking units. We did this so we could pick the best investment mix for our clients from a broad menu of alternatives while minimizing conflicts of interest. www.wsqcapital.com 2
Socially Responsible Investing – U.S. Origins Dates back to Quakers in the 1700s exclusion of slave trade Methodist investors exclusion of “sin” based businesses like gambling and liquor More recently, became popular in the 1960s with investors excluding Vietnam War profiteers 1980s institutions wanted to avoid investments in South Africa due to apartheid 1990s-2000s increased awareness of environmental issues and consumption behavior has led to “green investing” 2010s rise of divestment movement:350.org, universities, religious institutions, foundations www.wsqcapital.com 3
SRI Across The Political Spectrum Social Responsibility is a subjective term and means different things to different people On the “left” SRI values may include: environmental protection, fair trade, human rights, workers rights and minority rights On the “right” SRI values may include: pro - life/abortion, stem-cell research, gun rights, Religious values A socially responsible investment is one where an investor incorporates his or her values into investment decisions www.wsqcapital.com 4
Socially Responsible Investing Strategies Positive Screening : Seeks companies where values are reflected in business practices Negative Screening : Avoids companies where values are compromised Best-in-Class : Seeks companies in a “negative screened” industry that are thought leaders changing industry practices Shareholder Advocacy : Resolutions filed by investors in an effort to change corporate behavior www.wsqcapital.com 5
Facts About SRI Estimated $3.74 trillion out of $33.3 trillion in the U.S. marketplace today invested with an SRI mandate * That’s 1 out of every 9 dollars or 11.3% of all investments Used by universities, foundations, pension funds, nonprofit organizations, and religious institutions Individual investors are fastest growing segment As of 2012, there were 720 ESG screened investment funds with $1.013 trillion in assets, in 1995 there were only 55 with $12 billion * * Source: The Forum for Sustainable and Responsible Investment ussif.org www.wsqcapital.com 6
But What About Performance…? Total Return of the MSCI KLD 400 Social Index vs. S&P 500 Index (4/30/90 – 12/31/13) Source: Bloomberg Data since inception of MSCI/KLD Index The responsible investing index with the longest track record, the MSCI KLD 400 Social Index, has outperformed the S&P 500 Index since inception. 10.44% annualized vs 9.87% annualized Past performance is no guarantee of future results. The MSCI KLD 400 Social Index is a service mark of MSCI and KLD Research & Analytics, Inc. The S&P 500 is a trademark of Standard and Poor’s. It is an unmanaged index comprised of 500 common stocks. Investors cannot invest in the S&P 500. KLD is not an investment advisor and makes no representation or warranty, express or implied, regarding the advisability of investing in securities generally or in specific securities. www.wsqcapital.com 7
How Can Individuals Participate? Mutual Funds: Can be a good way to get access to a diversified, actively managed portfolio for a low minimum Exchange Traded Funds (ETFs): Similar to mutual funds, but passively managed Individual stocks and bonds – a customized portfolio www.wsqcapital.com 8
Old Rules Still Apply Investing socially responsibly does not mean ignoring investment fundamentals Diversification : don’t invest your life savings in one stock or fund Risk Tolerance : some investments carry more risk than others – make sure to understand risk before investing Time Horizon : when will you need access to your money? This will play a role in how much risk you should take If you aren’t sure how to pick the right SRI investments, contact a professional advisor who specializes in SRI www.wsqcapital.com 9
Terms and Conditions Washington Square Capital Management LLC is an investment adviser registered with the states of New York, California, Connecticut and Texas. Advisory services are only offered to clients or prospective clients where Washington Square Capital Management LLC and its representatives are properly licensed or exempted. Our website and this presentation are solely for informational and educational purposes. No advice may be rendered by Washington Square Capital Management LLC unless a client service agreement is in place with you. Washington Square Capital Management LLC 33 West 19th Street, 4th Floor New York, NY 10011 Tel: +1.646.619.1156 / +1.646.619.1157 Fax: +1.646.619.1158 Web: www.wsqcapital.com info@wsqcapital.com www.wsqcapital.com 10
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