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Doing Good While Doing Well

4 March 2013 in Trading Ideas

Appearing at the annual TED Conference in Long Beach, Calif., U2 frontman Bono brought the audience to its feet with an inspiring speech in which he noted that the number of people in the world who live in poverty has been cut in half during the last 20 years: It’s now 21%, compared to 43% in 19901.

Bono’s embrace during his TED speech of what he called “factivism,” or socially responsible investing driven by data, got a tweet-out from many in his audience, including another billionaire philanthropist, Bill Gates.

Socially responsible investing used to be a small niche in the personal finance world. But as more and more investors find themselves guided by their consciences as much as by their portfolio values, the category has seen dramatic growth. More than $3 trillion is now invested in companies deemed to be “socially responsible,” more than four times the amount from 19952.

Socially responsible investing is the basis for the eponymous Socially Responsible motif. This motif contains companies that, in addition to serving shareholders by delivering financial results, also have other commitments: to the environment, to a diverse workforce, or to avoiding products such as tobacco.

The selection of companies in the motif was inspired by “Low Fee Socially Responsible Investing”, published last year by noted financial advisor Tom Nowak, who told readers his aim was to provide “guidance for building a customized portfolio that reflects your worldview.” The actual selection of companies was made in consultation with several national rating systems that score firms based on social responsibility measures, political spending disclosures and other indicators.

The Socially Responsible motif is up 16.5% in the past year.


2The Forum for Sustainable and Responsible Investment, “http://ussif.org/resources/performance.cfm,” accessed Oct. 25, 2012.