@font-face { font-family: "Arial";}@font-face { font-family: "Cambria Math";}@font-face { font-family: "Arial Unicode MS";}p.MsoNormal, li.MsoNormal, div.MsoNormal { margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Arial; }p.MsoBodyText3, li.MsoBodyText3, div.MsoBodyText3 { margin: 0in 0in 0.0001pt; font-size: 10pt; font-family: "Times New Roman"; font-style: italic; }pre { margin: 0in 0in 0.0001pt; font-size: 10pt; font-family: "Arial Unicode MS"; }span.HTMLPreformattedChar { font-family: "Arial Unicode MS"; }span.BodyText3Char { font-style: italic; }.MsoChpDefault { font-size: 10pt; }div.WordSection1 { page: WordSection1; }
It’sno secret that yacht crew have expendable income. Once they’ve bought all of thelatest and greatest tech gadgets and are kitted out in the finest of fashions, what’s left to do with their hard-earned cash? Afterconsidering buying property or even starting a shore-side business, some crewturn to investments in order to make their money go further. Whileinvesting is a great way to diversify income and ensure that you have somethingleft over when you step off the big white boats, crew can take investing to thenext level by investing in something they care about and socially responsibleinvesting may be just the ticket.
Many investors, includingcrew, have strong opinions that don’t involvetheir views on interest rates and stock prices; these might include support fora cleaner environment or concern for the poor and the disadvantaged – just tomention a few well-known causes.
Increasingly, theseinvestors want their holdings to reflect their social, ethical or religiousvalues. They wish to avoid companies that profit from activities they oppose andsupport companies that behave in ways they consider appropriate. At the sametime, however, investors still want or need to earn a reasonable return ontheir portfolios.
Socially responsibleinvesting (SRI) seeks to reconcile these two objectives by helping investorscreate diversified portfolios designed to deliver an acceptable level ofperformance, while at the same time excluding companies that don’t meet their ethical standards. SRI investing recognizes that corporate responsibilityand societal concerns are an important part of many investment decisions – particularlywith the world’s increased focus on sustainability and climate change.
Why has socially responsibleinvesting gained in popularity? One of the reasons may be that investors askedthemselves this question: while mynumber one investment goal will always be to create a properly diversifiedportfolio based on my personal risk tolerance levels, how can I do a bit ofgood for the environment, for the world or to improve the condition ofmankind?
A second reason for SRI’spopularity is that some of the mostprominent institutional investors have increasingly added a social focus totheir investment decisions. These institutions, many with significant assetsand often with great public, political and media clout, often carry both a bigstick and use a loud voice. Some have become well-known advocates for socialissues and this is often carried out through their investments in socially responsibleprojects. An example is found in theCalifornia Public Employees’ Retirement System (CalPERS), one of the world’slargest public pension funds. CalPersrecently announced support for the United Nation’s Principles for ResponsibleInvestment, a menu of possible global actions on environmental, social andcorporate issues.
A third reason for increasedinterest in SRI is the simple fact that now it’s much easier to access professionallymanaged SRI vehicles. Many investment firms have created specific investmentprocesses that exclude companies that, in the investor’s view, focus onnon-socially responsible or acceptable activities. Once these decisions havebeen made, the manager constructs a diversified portfolio within the desiredconstraints. The goal is to deliver performance consistent with the investor’sreturn objectives and tolerance for risk.
@font-face { font-family: "Arial";}@font-face { font-family: "Cambria Math";}@font-face { font-family: "Arial Unicode MS";}p.MsoNormal, li.MsoNormal, div.MsoNormal { margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Arial; }p.MsoBodyText3, li.MsoBodyText3, div.MsoBodyText3 { margin: 0in 0in 0.0001pt; font-size: 10pt; font-family: "Times New Roman"; font-style: italic; }pre { margin: 0in 0in 0.0001pt; font-size: 10pt; font-family: "Arial Unicode MS"; }span.HTMLPreformattedChar { font-family: "Arial Unicode MS"; }span.BodyText3Char { font-style: italic; }.MsoChpDefault { font-size: 10pt; }div.WordSection1 { page: WordSection1; }
Mark Thompson and Trevor Fried are Financial Advisors at Morgan Stanley Smith Barneylocated in Fort Lauderdale, Florida, and may be reached at (954) 762 3000 orhttp://fa.smithbarney.com/markthompson/ MorganStanley Smith Barney LLC and its affiliates do not provide tax or legaladvice. To the extent that this material or any attachment concerns taxmatters, it is not intended to be used and cannot be used by a taxpayer for thepurpose of avoiding penalties that may be imposed by law. Any suchtaxpayer should seek advice based on the taxpayer's particular circumstancesfrom an independent tax advisor. © 2011 Morgan Stanley Smith Barney LLC. Member SIPC.
Related TopicsNot Your Average Freelance Gig
Shore-based Business
The Dollars and Cents of Buying Property