While Northstar does not have a Socially Responsible Investment (SRI) model, clients do occasionally express an interest in aligning their investing with their personal values. We are always happy to have discussions around client preferences in this area and usually we are able to adjust investments as requested.
That is one of the many benefits of serving as a more traditional money manager. Since we prefer to buy individual stocks, we can identify specific companies that some clients would prefer not to support for whatever reason and avoid owning such names in those portfolios. On the opposite side of the spectrum, we occasionally are asked to help clients identify investments that support the causes they are interested in and can invest directly in those as well.
From a practical standpoint, it is extremely difficult to have a broad-based socially responsible investment strategy, because almost everyone’s version of SRI is different. That’s true within our own firm as well as our client base. Some clients are focused on specific religious or moral beliefs, while others are interested in Environmental, Social, and Governance (ESG) factors or in some cases, around general values of global peace and health. Even within each of those areas, everyone can have a different idea of which companies do and do not promote those aspects and to what degree they care about each segment.
It’s also important to consider the potential impact avoiding investments in certain companies or sectors can have on your portfolio or the world in general over time. While there have been more studies of late showing that SRI and/or ESG factors can actually benefit portfolios, as with almost any investments, they run in cycles where they may or may not outperform.
At Northstar we have a general structure to our investments where we choose them based on a combination of quality and safety (which may include some SRI aspects), income and growth (specifically focused around the dividend), and profitability as well as valuation.
If a company can satisfy each of these parameters well within certain specifications, we may invest in it even if there could be a few of our clients that may not agree with some part of what the company is doing. However, we want you to remember that they are YOUR investments, not ours.
So, if you would like to discuss this topic further and potentially make some changes to the companies your funds are invested in, please contact us. We would love to hear about your specific values and how we can help ensure that you can sleep well at night knowing that your investments are directed as you desire.
Our portfolio management team can set up specific notes on your account to avoid investing in companies or industries based on your preferences. Contrary to many firms out there that invest in more mutual and exchange traded funds (ETFs), it is much easier to have specific SRI parameters around investments when your advisor invests in firms directly like we do, versus indirectly as many firms do now.