Wealth in Words

Socially Responsible Investing (SRI) is an investment style that caters to environmental, social, and corporate governance concerns. A socially responsible investment has two mandates: find companies that promote positive social impact as well as offer opportunity for financial gain. As it turns out, the two are not mutually exclusive. For example, from 1990 through 2013 an investment in the MSCI KLD 400 Social Index would have produced a higher return on your investment than a buy and hold strategy with the S&P 500 Index. Visually, the chart below dispels the myth that investors may sacrifice some potential gains in order to meet their socially-conscious investment objective. Instead, the opposite may be true. That is, socially responsible companies may make better products and earn more money for their shareholders, thereby creating long-term value through a higher share price. As the markets have evolved so too have SRI objectives, driven by shifts in societal and i

Since their inception in 1993, Exchange Traded Funds  (ETF’s) have increased exponentially in popularity with institutional and retail investors. The advent of ETF’s to the investment landscape is analogous to the introduction of flat-screen TV’s to the home entertainment arena. In other words, in the investment product space ETF’s function like the sleek, flat-screen High Definition TV’s, while their predecessor, the mutual fund, is big and clunky just like an old TV set. Accordingly, record assets have been invested in these products with hardly a sign of slowing down. This relentless demand is being fueled for a few reasons. First, ETF’s cost less than their primitive counterparts, the index fund and mutual fund. The costs to run a fund are ultimately passed onto the investor in the form of an expense ratio and, with mutual funds, additional sales and load fees. Since ETF’s offer a comparable investment strategy to an index fund (that is, both products are built to mirror a

What is an ETF? How is it used? What are its benefits? These are a few of many questions that will need to be explored to adequately understand this popular investment product. ETF is an acronym for Exchange Traded Fund which is an investment product that works similarly to a mutual fund.  However, there are several key differences between these products which ultimately give ETF’s an advantage. As the name implies, ETF’s are listed on an exchange and traded during market hours. This provides instant liquidity and exposure for market participants without having to wait to buy or sell funds based on closing values (i.e. Net Asset Value or NAV) as you would have to do with a mutual fund.  ETF’s also provide an alternative to equity index futures for money managers who desire timely market exposure or hedging ability. ETF’s can offer this exposure since most are “indexed” or created to mirror an existing basket of securities (e.g. S&P 500 Index). In other words, an ETF is structu