What Is Socially Responsible Investing (SRI)? The Ultimate Guide to Aligning Your Money with Your Values

• The Nuts and Bolts of SRI Investing
• Who’s Jumping on the SRI Bandwagon?
• Does Doing Good Mean Lower Returns?
• How to Dip Your Toes in SRI Waters
• Frequently Asked Questions

Ever wondered if your investments could do good while still making you money? That’s exactly what Socially Responsible Investing (SRI) is all about. This $23 trillion global movement lets you grow your wealth without compromising your ethics. From ESG ETFs outperforming traditional funds to Wall Street giants jumping on the bandwagon, we’ll break down everything you need to know about putting your money where your morals are.

The Nuts and Bolts of SRI Investing

Socially Responsible Investing (SRI) is like your personal financial filter - it screens out the bad apples (think tobacco, weapons, or fossil fuels) while spotlighting companies making positive impacts. The global SRI market now spans nearly $23 trillion across stocks, bonds, and other assets, with Europe managing about half and the U.S. handling over a third. What’s really exciting? The ETF space has exploded with ESG options. The pioneer, iShares MSCI USA ESG Select ETF, launched in 2005 with modest beginnings. Fast forward to today, and there are at least 120 ESG funds globally managing over $11 billion in assets. Not too shabby for "feel-good" investing!

Who’s Jumping on the SRI Bandwagon?

Turns out, pretty much everyone with a brokerage account! Retail investors, high-net-worth individuals, family offices, and even big financial institutions are pouring money into SRI. Morningstar reports flows into SRI and ESG funds skyrocketed from $5.5 billion in 2018 to $13.5 billion in 2019. And it’s not just about warm fuzzies - these funds have been delivering the goods performance-wise too.

Does Doing Good Mean Lower Returns?

Here’s the kicker - research from heavyweights like Oxford University and Deutsche Asset & Wealth Management shows companies with strong ESG practices often outperform their less-responsible peers. A massive meta-analysis of 2,000+ studies by Deutsche and Hamburg University found a clear positive LINK between ESG standards and financial performance. So much for the myth that ethical investing means sacrificing returns!

How to Dip Your Toes in SRI Waters

At Sarwa, we’ve made SRI investing as easy as pie (and just as satisfying). Our SRI portfolios mirror the risk/return profiles of our traditional ones - the only difference is we swap in companies making positive impacts. Some ETFs in our lineup include SUSA, ESGD, ESGE, VNQ, BND, and BNDX. The cherry on top? We charge the same low fees for our SRI portfolios as our regular ones. No "ethics tax" here!

Frequently Asked Questions

What exactly is Socially Responsible Investing?

SRI is an investment strategy that considers both financial returns and social/environmental impact. It actively seeks out companies with positive practices while avoiding those involved in harmful activities.

Does SRI investing really perform as well as traditional investing?

Multiple studies, including comprehensive research from Deutsche Bank and Hamburg University, have shown that companies with strong ESG practices often match or exceed the performance of their less-responsible counterparts.

How big is the SRI market?

The global SRI market is massive - we're talking about $23 trillion across various asset classes, with Europe and the U.S. leading the charge.

What are some popular SRI investment options?

ETFs have become a favorite vehicle for SRI investing, with options like the iShares MSCI USA ESG Select ETF paving the way. At Sarwa, we use a mix of ETFs including SUSA, ESGD, and others in our SRI portfolios.