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Valley investors targeting sustainable funds

Posted 3/22/21

Socially responsible, green and values-based.In investing, these characteristics are surging.More people are drifting toward sustainable investing - a method that gives relevance to whether a company …

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Valley investors targeting sustainable funds


Socially responsible, green and values-based.

In investing, these characteristics are surging.

More people are drifting toward sustainable investing — a method that gives relevance to whether a company does some good in the world, according to financial experts.

Jason Lattin of BMO Wealth Management in Scottsdale said he is seeing an uptick in clients who see importance in whether companies operate an honest, trustworthy operation.

Mr. Lattin said the topic is becoming top of mind for a lot of his clients. People are paying attention to whether a company is showing injustice or inequality to certain groups or individuals.

“(They ask themselves), ‘Are we going to invest in a business that will have a positive or negative effect’?” Mr. Lattin said.

According to a CNBC story, sustainable investing has rapidly taken off.

A record $20.9 billion flowed into the sustainable funds category during the first half of 2020, the story said.

Some national experts say values-based investing could be a responsible decision because some of those types of companies have stood the test of time over the years.

Funds such as  Invesco Solar EFT and ALPS  Clean Energy EFT are examples of high-performing sustainable funds since they either  interact positively or have excellent corporate governance.  

The ALPS fund — which has investments in such firms as electric vehicle maker Tesla Inc. as well as clean energy provider NextEra Energy Partners LP — has seen strong growth during the past year, leveling off in the mid-$70 range after being about $34 per share at this time last year. It peaked at over $100 per share in February, according to Yahoo Finance.

The story is similar for the Invesco Solar fund, which has gone from less than $23 per share at this time last year to nearly $90 per share as of Friday, March 19, according to Yahoo Finance. Invesco hold shares in companies such as Sunrun Inc. and Tempe-based First Solar.

Those kind of growth rates exceed those put out by the S&P 500, Nasdaq and Dow during that time period, data show.

In a recent news story, Meg Voorhes, director of research for the Forum for Sustainable and Responsible Investment, said it’s all about the long-term.

“Why do people invest?” she said in the article. “You’re deferring immediate gratification.

“You’re thinking long-term — about your education, your children’s education, retirement — things that are 10, 20 years off,” Ms. Voorhes said. “With sustainable investing — you’re thinking about your hopes for the next generation and about — what do you want the world to look like?”

But Jeff Katz, owner at Sun Cities Financial Group, said he rarely talks to his client base about sustainable investing.

Instead, he said his clients — mostly over age 60 — care more about their overall return rather than whether or not companies demonstrate socially acceptable behavior. Mr. Katz has been a financial advisor in Arizona since 1984.

Mr. Katz said his clients want safe investments that will more than likely give them a good return.

“They want to earn at a decent interest rate,” Mr. Katz said. “...As a matter of fact, I’ve hardly ever seen (clients talk about sustainable investing) in my entire career.”

Mr. Lattin contends the pace won’t slow and continue to pick up steam.

“Some of it could be that it’s a hot (button issue) these days,” Mr. Lattin said. “People gravitate toward it.”

In fact, a study by New York-based investing firm BlackRock found stockholders made gains by investing in firms with a better record on social issues.

The BlackRock study state “companies with stronger social scores on factors such as better customer relations and better workforce management did better in the turmoil” and were thought of to be more effective and independent.

“Companies with strong profiles on material sustainability issues have potential to outperform those with poor profiles,” the report said. “In particular, we believe companies managed with a focus on sustainability should be better positioned versus their less sustainable peers to weather adverse conditions while still benefiting from positive market environments.”

Mr. Lattin echoed those findings.

“I think it’s going to continue to grow," he said.