Is Sustainable Investing Possible?

Good Morning,

The word "sustainable" is being constantly thrown around today because of our desire to live better/healthier lifestyles. This has come in the form of paper straws, plant-based burgers, more exercise, and more aware of climate change. But, did you know that there is also a way to do sustainable investing? Today, CNBC published an educational article about ESG (Environmental, Social, and Governance) Investing. This article is lengthy but informative. A couple of key points I picked up from the article were;

1. Investors are becoming more aware of this style of investing and moving money into various funds
2. This type of investing can be done using ETFs (primarily passive product) or Mutual Funds (primarily active products)
3. There is no common definition of ESG, so firms utilize their view of what it truly means

I have seen this type of investment philosophy in many forms, but it is starting to become more prominent. From my experience, the one take -away from the article that must be stressed is that this style of investing requires us to read more into the various investment products being offered. Because there is no uniform definition nor guidelines, we must read the fine print to understand the fund(s) true intentions/goals. There are some unintentional impacts from ESG investing because there will be some companies (or industries) that these strategies will have limited or no exposure within.

The best thing about investing is that we can all do it in a fashion that best works for our objectives. While ESG investing might not be for all, it will be appealing to some. For those interested, check out UNPRI for more information about ESG investing.


Comments

Post a Comment

Popular posts from this blog

Tax Time!

Good Morning, The end of January is quickly approaching, which the means tax season is upon us. Everyone hasn’t their own method of filing their taxes, but the new 1040 form is now the size of a postcard. Marketwatch came out with an article highlighting this change and other sources. The key points from the article are: 1. Despite it being smaller, it isn’t more different than simplistic 2. You need to file schedules if you are: itemizing, have business activities, capital gains/losses or dividend/interest income associated with investments, etc. 3. The due date for most taxpayers is 4/15 When the new tax laws were put in place the goal was to simplify the tax code and allow more people to use the standard deduction. What most of us will find out is that with a change to the tax code the size of our refunds/payments will change based on the taxable percentages changing.   The simplification of the tax code might change the need for a tax preparer, but before...
Read more

Federal Reserve Raises Rates Again

(repost from 9/27/2018) Good Morning, Yesterday, the Federal Reserve raised interest rates again this year. The CNNMoney article below covered a couple points worth paying attention to: The Fed does not see tariffs having an impact on the economic data at this time There is some uncertainty with doing another rate increase in the fourth quarter (earlier this year the Fed was split on whether it should do three or four raises), but they plan on doing three increases next year, and one in 2020 Trade tensions between the US and China are a headwind for 2019 growth which is forecasted to be 2.5% (currently we are on track for 3.1% GDP growth) This article lays out expectations for the Fed to raise close to another 1% over the next 2 years which would push interest rates higher. The impact of this will be higher interest rates payments on variable loans, higher interest rate payments for the government, and this will slow down our hot economy. The Federal Reserve is dependent on ...
Read more

Fake Christmas

Good Morning, This year has been a crazy one that seemed more like a soap opera than real life. One of the topics that I have blogged about in the past was the F.I.R.E. (Financial Independence, Retire Early) methodology. When I first learned about this topic earlier this year ( January 2019 post ), I was a little skeptical based on my view that some of its underlying future assumptions are flawed. Last week a proponent of the F.I.R.E. methodology wrote an article for CNBC about why the lifestyle turned out to be unsustainable for his family. The CNBC article highlighted a couple of key points; Income needs were overestimated based on an assumption of higher bond interest Children increase cash-flow needs Healthcare costs were underestimated Location and cost of living were significant factors in the cost of living The overall concept of F.I.R.E. is attractive, but sustainability was always one of my biggest complaints. I am a fan of the concept and the philosophy, bu...
Read more