managing a portfolio from a morally-conscious perspective. Not only are we able to screen out companies that generate profit from pornography, abortion, anti-family entertainment, alcohol, gambling, tobacco, unfair labor practices and countries that support terrorist activities, but we can also accentuate those companies that conduct their affairs in laudable ways. Some of the key advantages of this method of portfolio management include:
I. The use of Separately Managed Accounts (SMA) and building a portfolio of individual stocks and bonds versus mutual funds.
II. Greater sophistication of management with a tactical approach that allows hedging strategies to help you mitigate economic and market volatility.
III. Lower overall cost of management versus mutual funds, which have imbedded reported and unreported expenses in addition to the advisor fees and can be significant when added together. Using SMAs will typically lower the total cost of management by 1% to 1.5%.
IV. Research on Values Based Investing from Credit Suisse, Goldman Sachs and Bain Consulting indicate that investing in ethically admirable companies that avoid objectionable activities and seek to create value for their customers versus generating profit at all cost can, and has, enhanced long-term performance.
V. Peace of mind knowing that investments are made in a manner consistent with core values and convictions by focusing on “good profits” as opposed to profiting from ill-gotten gain.
VI. Avoidance of the mutual fund performance chasing that ultimately hurts longterm results, understanding that approximately 85% of the top quartile funds over the last 10 years have had three year periods of underperformance versus their peers within that timeframe.
VII. Sending a message to industries and corporations that generate profit from objectionable activities.
Our goal with Values Based Investing is to help you manage your portfolio in a manner consistent with your values while lowering the cost of management of your portfolio, increasing the sophistication, and enhancing the long-term growth of your portfolio.