Socially Responsible Investing: Investing That Makes A Difference

Socially responsible investing (SRI) has come to represent various investment strategies that favor companies with business practices generally viewed as socially responsible, ethical, and/or sustainable.


Overall, investor interest in Socially Responsible Investing has been gaining momentum. In fact, the number of investment funds incorporating ESG (environmental, social, and governance) factors has increased 12% in the last two years alone, from 894 in 2014 to 1,002 in 2016. According to the Forum of Sustainable and Responsible Investing, these 1,002 funds represent $2.6 trillion in net assets.

What is Socially Responsible Investing?

Fundamentally, SRI is an investment strategy in which companies’ social and environmental records and objectives are factored in when building a portfolio.

Money managers who use SRI strategies often integrate ESG factors with traditional financial analysis to choose securities for their funds. The heightened focus on corporate sustainability issues allows investors to compare how businesses in the same industry have adapted to meet social and environmental challenges, and provides some insight into which companies may be exposed to risks or have a competitive advantage. For example, in some instances, poor decisions and lack of planning could cause negative financial results for a company, whereas good corporate citizenship may boost a company’s public image and help create value.

Why is Socially Responsible Investing attractive to investors?

Individual investors may have different opinions about which policies and practices have a positive or negative impact on society. Fortunately, there are a number of SRI options to choose from. This gives investors the ability to build a portfolio that aligns with their personal values and offers the potential for earning positive returns.

In addition, investors may have difficulty measuring the intangible value associated with socially responsible companies, which means these companies may be undervalued and represent a potential buying opportunity.

What might investors find unappealing?

SRI opponents claim that investing should be about making money first; therefore, social and environmental issues are viewed as noble impediments to that goal. Focusing on SRI strategies limits the total universe of available investments and could make it more challenging to diversify and maintain your desired asset allocation. Diversification and asset allocation are methods used to help manage investment risk; they do not guarantee a profit or protect against investment loss.

Moreover, although data is available, it can be difficult to thoroughly assess the ethics of a given company. For example, beyond the value chains of a company itself, investors might also need to look at the different social standards among the contractors and subcontractors associated with the company.

Remember that different SRI funds may focus on very different ESG criteria, and there is no guarantee that an SRI fund will achieve its objectives.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful. The return and principal value of SRI stocks and mutual funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.

Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.


© 2017 Kmotion, Inc.

A Note on Recent Market Volatility

market volatility.jpg

The past two trading days in the stock market have been quite a shock to many investors as the Dow plunged over 600 points on Friday, followed immediately by an 1,175 point drop on Monday - the largest intraday point decline in its history. Similarly, the S&P 500 fell over 4% in its largest one-day decline since August 2011; erasing all its gains for 2018 so far. 

Much of the sell-off can be attributed to the January Jobs report that was released on Friday. As the unemployment rate remained steady at 4.1% and wage growth increased at its fastest rate since the middle of 2009, many investors have grown concerned that the Federal Reserve will begin to raise interest rates faster than what was previously expected. 

While the surge in market volatility and simultaneous plunge in the equity markets can be concerning in the short term, this may be a good opportunity to readdress your current portfolio allocation to evaluate if it still meets your risk tolerance and retirement goals. 

And as always, we encourage you to reach out to us with any questions at (781) 235-4426 or at

IRS Cost of Living Adjustments for 2018

Plan limits are adjusted annually for cost-of-living increases under RC Section 415. Each year these adjustments are calculated and released by the Internal Revenue Service (IRS). Last week, the IRS announced the tax year 2018 annual inflation adjustments. A few notable changes for 2018 include Pension Plan Limitations and the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,000 to $18,500.

A chart of the 2018 limits is provided below: