November 8, 2013

Socially Responsible Investing is no longer a niche strategy. It’s gone mainstream as more companies, investment firms and investors pay attention to environmental, social and governance issues. And the belief that this approach means lagging performance has been proven wrong. SRI funds are now competing head on with traditional money management. This week’s guest is Barbara Krumsiek, the CEO of Calvert Investments Inc., a leader in SRI mutual funds and a Financial Thought leader in her own right.

WEALTHTRACK Episode #1020; Originally Broadcast on November 08, 2013

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Barbara Krumsiek

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Calvert Investments, Inc.

Consuelo MackYup, the Twitter pricing is crazy. The $26 a share initial public offering price for 70 million shares was at the high end of the range and according to Bloomberg, the 73% jump to a close of $44.90 was the biggest one day-pop for in IPO that raised more than $1 billion since in 2007. This for a company with no earnings!

I have to admit that watching the pre-opening drama on CNBC this morning got my adrenalin racing. Exactly the reason any rational person should turn the TV off! But it was fun to see the excitement and celebrate the wonderful creative, entrepreneurial spirit that makes this country so great.

I think Bill Gross said that “Twitter is the new tape.” He is correct. This has become a communications phenomenon. Who would have imagined that 231.7 million users a month would send more than 500 million tweets a day?

Back to reality: the question remains what is it worth? I talked to value investor Mark Freeman today, the Chief Investment Officer of Westwood Holdings, who was adamant about the fact that Twitter was certainly not worth anywhere near what it sold for today.

Over a year ago we did a two-part series on socially responsible investing, a growing area of interest among governments, institutions and individuals around the world. It turns out the momentum towards SRI, now also known as “sustainable and responsible investing” is building.

The most recent comprehensive count done in 2012 showed that total SRI assets in the U.S. have reached nearly $4 trillion, a 22% increase since year end 2009.  And a 486% jump since 1995 when the size of the U.S. sustainable and responsible investing market was first measured.

Individuals and institutions interested in SRI focused investing now have many more choices. The number of mutual funds, ETFs and other pooled products that incorporate environmental, social and corporate governance criteria has exploded, from 55 vehicles in 1995 to 720 by 2012 and their assets have grown from $12 billion to over $1 trillion.

But what about performance, which is probably the most frequently asked question about this approach? It turns out that SRI is more than holding its own. The benchmark MSCI KLD 400 Social Index has delivered average annualized total returns of 10% since its 1990 inception, outperforming the S&P 500’s 9.5% returns.

What is different however is the scope of what socially responsible investing covers. It’s gotten much broader than avoiding the “sin” stocks involved in alcohol, gambling and weapons. Calvert Investments, one of the pioneers in SRI has developed its Calvert Social Index with seven criteria which it uses to measure the performance of U.S. based companies. They range from governance and ethics,  which includes company policies to promote women and minorities, the environment,  which considers water usage and conservation, and how companies run their international operations such as considering community impact and the rights of indigenous peoples.

This week’s guest is a Financial Thought Leader in the field. She is Barbara Krumsiek, President, CEO and Chair of Calvert Investments which she has run since 1997. Krumsiek currently serves as Co-chair of the United Nations Environment Programme-Finance InItiative, a partnership between the UN and 200 financial institutions around the globe mandated to develop links between sustainability and financial performance. She is also a powerful advocate for advancing women in business. Under her leadership the Calvert Women’s Principles were created, the first global code of corporate conduct focusing exclusively on empowering and advancing women.

If you are a PREMIUM subscriber you can see both the show and our EXTRA session with Krumsiek starting this evening where she talks about what a great influence the Girl Scouts of America organization was in developing her confidence, leadership skills and her passion to make the world a better place. It also helped her develop marketing and money making skills. Never underestimate the power of Girl Scout cookies! It will all be available on our website beginning tomorrow evening.

In the meantime, have a great weekend. Honor our veterans on Monday, Veterans Day. I know I will. My son, a First Lieutenant in the Marine Corps, just returned from a tour in Afghanistan with his entire platoon safe and sound.

Make the week ahead a profitable and a productive one!

Best regards,

Mathews Asia


– 53% of S&P 500 companies publish sustainability reports
– Out of 1,000 largest U.S. companies in Dow Jones Total Market Index, 708 meet Calvert Social Index Criteria

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Invest in water focused indices, ETFs or mutual funds

“Water is a very, very compelling theme. There are ways to access water investments. There are indices, ETFs, mutual funds that really have focused on the investment opportunity in this space, and then the second one I would say is green bonds. This is new and different, and I think it’s an unrecognized opportunity in the marketplace where we have information content that we think is a positive for the creditworthiness of these issuers, so we think that these are themes that will definitely be positive performers.”

– Barbara Krumsiek

Wal-Mart Stores Inc. (WMT)

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Coca-Cola Co. (KO)

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The transcript is available to WEALTHTRACK Premium subscribers here. You can also purchase and download this transcript safely and securely with your credit card or PayPal account for $4.99. You will need the free Adobe Acrobat Reader (Mac/Win) or Preview (Mac) to view and print the transcript.

Mary Jane McQuillen & Bill Paul

We are kicking off a new season of WEALTHTRACK with the first of a two part series devoted to what’s being called “impact investing,” the practice of aligning financial goals with personal values. Impact investing goes beyond what used to be called socially responsible investing, which was designed to avoid certain businesses such as gambling, alcohol and tobacco. It is now pro-active as well, investing in companies that are making a positive impact in a wide range of areas including environmental, societal and governance (ESG).


Amy O’Brien & Ingrid Dyott: Investing in a Socially Responsible Way

Impact investing, while not yet mainstream in this country is growing rapidly and is very much a global phenomenon. The financial times recently reported that “about 95% of the 250 largest global companies now report on their corporate responsibility activities, a jump of more than 14% from 2008. The Financial Times notes that two-thirds of those that do not report are based in the U.S. and the picture is more mixed among smaller companies. However increasing numbers of investors in the U.S. are paying attention to environmental, social and governance issues, or ESG as they are known in the trade. According to a report by the Social Investment Forum Foundation on socially responsible investing trends in the U.S.,“sustainable and socially responsible investing (SRI) in the United States has continued to grow at a faster pace than the broader universe of conventional investment assets under professional management.”



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