June 2021 Issue: Turn Outrage into Investment Opportunities-Turn Outrage into Investment Opportunities by Marie Thomasson

Turn Outrage into Investment Opportunities by Marie Thomasson

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The Covid-19 pandemic has highlighted the importance of addressing inequalities such as economic, racial, gender, and environmental disparities in investment strategies. Younger generations of investors are increasingly prioritizing social justice and equity in their portfolios. Advisors can incorporate these concerns without completely altering their investment approach.<br /><br />One area of focus is recognizing the value of essential workers and ensuring fair treatment. Investors can support social justice by moving their cash to community development financial institutions (CDFIs) that prioritize lending to low-income borrowers. This helps allocate funds to initiatives that support disadvantaged communities.<br /><br />In fixed income, advisors can consider the social impact of municipal bond issuance, particularly for school districts or infrastructure projects. They can also explore green bond funds that support clean energy and infrastructure modernization in marginalized communities.<br /><br />For stocks, environmental, social, and governance (ESG) and socially responsible investing (SRI) mutual funds and ETFs provide options for values-aligned portfolios. These funds typically exclude sectors or companies with harmful practices or products.<br /><br />Direct indexing is a growing trend among advisors, allowing clients to align their investments with their values. It involves creating a portfolio that closely tracks an index while enabling shareholders to vote on initiatives important to them.<br /><br />Alternative investments, such as impact investing, can also address inequalities. Accredited and non-accredited investors can support companies and individuals that have been excluded from traditional finance, including marginalized communities and sustainable initiatives.<br /><br />Addressing social justice and inequality requires a shift from model portfolios to customized portfolios based on individual clients' values. Embracing this change presents significant opportunities for advisors to make a real impact.<br /><br />Ultimately, advisors have a range of investment options across cash, fixed income, stocks, and alternative investments to address social justice concerns. By incorporating these strategies, investors can align their portfolios with their values and contribute to positive change in society and the environment.

Keywords

Covid-19 pandemic

inequalities

investment strategies

social justice

equity

essential workers

community development financial institutions

green bond funds

ESG

impact investing