Above & Beyond Retirement, LLC
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What is a "SRI"?

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And what does it mean for my retirement portfolio?

 

Socially Responsible Investments or SRI’s are popping up in financial news more and more.

 

They are investments that focus on sustainability, green energy, environmentally friendly practices and a variety of other factors that help investors embrace these money making options with a clear conscious.

As Certified Pension Consultant or CPC, I work closely with small business owners in designing retirement savings employee benefit programs that leverage tax-favorable options to set aside meaningful amounts for the future as efficiently and cost effectively as possible. As such, I partner with a variety of investment advisors (RIA), brokers and financial planners who then work with the clients to help them invest those dollars for growth.

The first time I encountered an in depth discussion on the availability of SRI mutual funds in the 401(k) Plan world was about 7 year ago during a trustee review meeting when a client asked their advisor for more diversification in their plan options.

At that time, the advisor's response was hesitant; they did not want to add SRIs to the plan line up:  

1) There weren't many options available to choose from and

2) the ones that were, did not have much history to review or compare.  

The advisor felt that these funds were likely to under-perform and that the client would be doing their plan a disservice by focusing on social responsibility rather than bottom line returns.

A recent article published in Charles Schwab's magazine, OnInvesting, provided some great data for investors who like the idea of supporting companies that are friendly to their world and the environment.

 

As outlined in Schwab's article, the U.S. equity open-end Socially Responsible Investment (SRI) funds out performed non-socially responsible mutual funds in both the 10 year and 5 year ranges. In addition, the SRI group fund performance for the 3 year review was only slightly less.

SRI’s are proving to be competitive options for investors to explore. 

Plus, the availability of solid historical data is making it easier for retirement plan sponsor’s to find great investment options for their plan participants that are in alignment with their cultural values.

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