What Makes An Investment Socially Responsible? Louis Berger - - PowerPoint PPT Presentation

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

What Makes An Investment Socially Responsible?

About Us

www.wsqcapital.com 2

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

• ur clients from a broad menu of alternatives while minimizing conflicts of interest.

Socially Responsible Investing – U.S. Origins

www.wsqcapital.com 3

 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

SRI Across The Political Spectrum

www.wsqcapital.com 4

 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

Socially Responsible Investing Strategies

www.wsqcapital.com 5

 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

Facts About SRI

www.wsqcapital.com 6

 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

• nly 55 with $12 billion *

* Source: The Forum for Sustainable and Responsible Investment ussif.org

But What About Performance…?

www.wsqcapital.com 7

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

• utperformed 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.

How Can Individuals Participate?

www.wsqcapital.com 8

 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

Old Rules Still Apply

www.wsqcapital.com 9

 Investing socially responsibly does not mean ignoring

investment fundamentals

 Diversification: don’t invest your life savings in one stock

• r fund

 Risk Tolerance: some investments carry more risk than

• thers – 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

Terms and Conditions

www.wsqcapital.com 10

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