The Wages of Virtue

“Socially Responsible” investing is based on the premise that sometimes you can do well by doing good. A recent study evaluated how well it performs.

There are two forms of socially responsible investing: “positive” screens that tilt portfolios towards companies that promote a diverse workforce, invest in their communities, and have vigorous consumer advocacy; and “negative” screens that exclude stocks of companies associated with alcohol, tobacco, or other factors.

The results were striking. Portfolios that tilted towards responsible companies outperformed the market, while portfolios that shunned certain businesses underperformed. From ’92 to 2007 the “positively” screened stocks added about 0.5% annually, while the negative screen lost about 3% per year.

This makes intuitive sense. By doing good, managers can help build up their businesses. But a company’s line of business may not make it a bad investment. And how we live is often more important than what we do.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

direct: 603-252-6509
reception: 603-224-1350 • •
By | 2014-09-05T13:16:25+00:00 August 10th, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment