SerenityShares Analyzes the Evolution of Investing with Purpose
“SRI 3.0—Impact” White Paper charts changes and growth of Sustainable, Responsible and Impact Investing.
WASHINGTON DC—December 26, 2017--- SerenityShares Investments LLC, a Registered Investment Advisor that designs strategies to simplify and democratize impact investing, today released “SRI 3.0—Impact,” an analysis of the evolution of strategies employed by asset managers in the $8.72 trillion Sustainable, Responsible and Impact Investing industry.
Author Scott Sacknoff, CEO of SerenityShares, traces SRI from its roots around Earth Day in 1970 to its growing prominence among mainstream investors. Through its various iterations, Sacknoff notes that a central tenet of SRI managers has been the quest to define what is “good” when it comes to investing.
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“In many ways, SRI portfolio managers creating a public equity portfolio have a more difficult task than traditional managers,” says Sacknoff. “They need to consider not just the prospect of financial return but the client’s ethical, religious, social, and personal beliefs.”
Initial SRI investment vehicles typically followed one of two paths—employing a single negative screen or focusing on a single positive sector/theme. The mid-2010s saw the emergence of more activist investors and increased focus on adjusting the behavior of companies, which led to a shift in what SRI means. The acronym SRI evolved from “socially responsible investing” to “sustainable, responsible, impact” to reflect the “changing motivations and inspirations of responsible investors.”
In recent years, a number of firms have focused their attention on ESG: environmental, social, and governance ratings. While ESG makes broad conceptual sense as it can identify risks in individual companies, Sacknoff notes that there are a number of drawbacks to employing ESG ratings as the basis for stock selection in a passive fund vehicle. “In particular, the ratings and analysis are typically proprietary and the details unavailable, making it hard for advisors and investors to select an ESG strategy,” writes Sacknoff.
The next generation of SRI investing is focused on bringing impact investing to public equity markets. Although the vast majority of assets invested in impact are currently deployed via private equity ventures or in bond/debt offerings, tapping public equity market could democratize impact investing and bring new sources of funding to tackle some of the world’s most pressing environmental and social issues. The key, writes Sacknoff, is to craft a methodology that:
· Focuses on solutions and the challenges affecting society in order to address the concept of “good” and
· Can be benchmarked so investors can measure the impact results from an investment in a public security
To create this methodology, SerenityShares looked to the United Nations Sustainable Development Goals (SDGs), a set of 17 ambitious targets to tackle climate changes and social inequality by 2030. For policy makers, the SDGs help them identify programs that achieve results and can be deployed into other areas, assess the effectiveness of investments in certain areas, and determine the best means to achieve direct results.
The one problem with these categories is there is no direct correlation between the SDGs and public equities. To bridge the gap, Sacknoff developed the SSI Impact Index, a methodology that breaks the U.N. SDGs into 20 categories that center on solutions-focused investments in clean water, green transportation, organic foods, elder care, local access to health care and other goals. Sacknoff, a Wall Street-trained indexer who specializes in the design of equity benchmarks for investment funds such as ETFs (exchange traded funds), reviewed dozens of institutional and academic reports (including the UN SDGs), and surveyed the landscape of existing investment products to design SSI Impact Index.
As SRI products across the spectrum of asset categories expand, Sacknoff says investors and advisors will have more options to align positive impact with investment returns. “For equity investors, these advances will provide them with greater options, from providing new core holding, to targeted exposure to reflect a desired personal belief, or as a replacement to an existing, broad market portfolio.”
SerenityShares™ is a Washington, DC-based Registered Investment Advisor that designs strategies to simplify the investment process. Our goal is to provide investors with a better way to invest their core holdings, as well as the ability to make an impact with their investments. Utilizing the benefits of exchange traded funds, we are an innovator that employs rules-based, passive index methodologies to solve problems and meet the needs of investors.
Kathleen Neumann, 202-349-3917, email@example.com
Kathleen Neumann, 202-349-3917, firstname.lastname@example.org
Carefully consider the Funds investment objectives, risks, charges, and expenses before investing. This and additional information can be found in the statutory and summary prospectus, which may be obtained by visiting serenityshares.com. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Because the methodology of the Index selects securities of issuers for non-financial reasons, the Fund may underperform the broader equity market or other funds that do not utilize impact criteria when selecting investments. The Fund may invest in foreign securities and smaller companies, which involve additional risks. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.
The SerenityShares Funds are distributed by Quasar Distributors, LLC.
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