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.”
About SerenityShares
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.
DISCLOSURES
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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