Transcript
Hello, everyone, welcome to Wednesday. This is pre recorded, I will be back tomorrow. And I want to answer a question that comes up quite often is, how do I create a sustainable investment portfolio. So let’s say I have a client talking to me. And they just want to make sure that they’re investing their money in companies that they feel really good about that are doing well for the environment and other areas in terms of how they’re treating their employees and everything. Well, we’ve had those type of portfolios since 1987, when I first started half of my portfolios are those types of portfolios? Well, for a very long period of time, those portfolios did worse than the traditional models that I offered to my clients. And that was okay, you know, they liked that it was fine.
But things have changed in the last five years, those portfolios have met or actually exceeded the returns for my traditional models. And here’s why, used to be you had fund manager who would decide what to pick and do the analyst on, you know, how this company was doing in terms of its social responsibility. And now these two big companies, MSCI and Sustainalytics, have come along. And they do a tremendous amount of research on what’s called ESG, E for environmental, S for social, how they treat the environment, the community that they’re in, and G for governance, basically, how they run their company and how they treat their employees. And they give a number to every single company. And so what happened was now these investment companies can come along like Vanguard or BlackRock. And they can say, hey, I want to create an index. But I only want to use companies with this ESG number higher. And so what’s happened is, it brought the cost way down, we no longer have the fund manager to pay. And, wow, it made a huge difference.
And so we can create these great portfolios around that. And so that’s what happens. That’s how it works. It’s really fascinating. I’d be happy to show you, many of you already have these portfolios, but if you’re interested, I’d be happy to show you how that works also. And so that’s what we’re going to talk about today. And I thank you very much and I look forward to talking to you live tomorrow. Thank you.