Following the post-COVID stimulus hangover in 2022, the bull market has continued to run. One of the key factors was the Federal Reserve’s decision to
Sand Hill Launches New Socially Responsible Investing Portfolio
Published Date : June 13, 2014
In an effort to fulfill evolving client needs, Sand Hill has recently launched a Socially Responsible Investing (SRI) portfolio available to all clients across each one of our investment strategies. While Sand Hill has been investing in the SRI space at the request of clients for numerous years, the launch marks the beginning of a specific SRI offering. The portfolio consists of ETFs and mutual funds managed by high-quality SRI investment managers. Sand Hill employs the same rigorous manager due diligence process used for our traditional portfolios to identify those SRI managers who are best equipped to be successful investing in the SRI space – both from an investment and a philosophical perspective.
Socially Responsible Investing involves integrating environmental, social and governance (ESG) criteria into the investment analysis and decision-making process. Stocks and bonds are evaluated in much of the same way they might be in traditional investing, but with an additional ESG lens on the analysis that looks to favor companies meeting specific SRI criteria.
There are pros and cons to be weighed when considering Socially Responsible Investing. On the positive side, SRI allows certain individuals an opportunity to align their investment portfolio with their personal values. While exact screens tend to be different from fund to fund, there are some generally agreed upon criteria for what is normally included and excluded in an SRI portfolio. Environmental criteria screen for companies that have thorough and detailed environmental policies and practices, a successful track record in avoiding and/or dealing with any environmental issues, and a commitment to improve their environmental sustainability going forward. Social criteria focus on a company’s diversity, its occupational health and safety, and its overall treatment of employees. And finally, governance criteria screen for companies that have demonstrated transparency and accountability and tend to exhibit a strong alignment of manager and shareholder interests.
There are potential drawbacks when employing an SRI strategy. One downside is that the exact metrics used to screen each SRI fund tend to be different. While an SRI screen is employed in all SRI funds, the criteria of the screen may or may not align perfectly with the investor’s values. In addition, there’s still much debate surrounding the return potential of SRI-exclusive investments versus their non-screened counterparts. While some argue an SRI screen helps performance by focusing on companies that are debatably less risky given their lack of ESG issues, historical performance results have been mixed, indicating that SRI funds can significantly lag their non-SRI benchmarks. This underperformance is also due to the fact that SRI funds tend to be actively managed and come with higher fees.
While there are many considerations necessary before embarking on an SRI strategy, Sand Hill is excited to launch an SRI-specific portfolio that broadens our total offering and gives our clients more choice.
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