Redrick Terry:
It’s time now for 4 Your Money. We are joined by John Nelson of NelsonCorp Wealth Management. Welcome back, John.
John Nelson:
Happy to be here. Thank you, Redrick.
Redrick Terry:
Absolutely. While there’ve been some major swings, both up and down, this year in the financial markets, there is one thing that you folks have been looking at. It’s been trending in just one direction. What is that?
John Nelson:
Yeah, this year has certainly been interesting. A lot of volatility, but there are some areas that have showed us some consistency. And one that we’re going to speak about today is socially responsible or environmental, social and governance type investing. This is an area of investing that is really important to investors who are looking for a socially responsible type methodology of investing their money, rather than the more traditional of looking at it from a purely financial standpoint.
John Nelson:
This has seen significant flows, and I think I have here on my first graphic that you can see the flows that have come into this type investing. It’s picked up a lot of steam in the last couple of years, but even starting beginning of this year, we saw about $40 billion, in terms of assets in this type of area. We’re now, at this point in the year, over $160 billion. The appetite is certainly there. Investors have been given more and more options that are available to them in this environment or this focus area. And we think this trend will likely continue.
Redrick Terry:
What are the factors that are analyzed when thinking about investments through that particular lens?
John Nelson:
Yeah, as stated before, environmental, social and governance. Looking at first one, environmental. Things like pollution, treatment of animals by companies, waste or how they conserve natural resources, those are certain areas that get a lot of focus in the environmental, and probably one of the more talked about our bigger areas of focus in these funds.
John Nelson:
Social would be the standpoint of companies, working conditions, things of that nature, support to local communities. A lot of focus there. And then governance is primarily transparency, voting opportunities for investors, record keeping transparency, things of those magnitudes that really matter to investors. And I would invite those who … The last two to three years, we’ve seen significant progression in this area. There are a number of investors that I meet with firsthand that weren’t all that thrilled with a couple of years ago the options available to them in this environment, but they’ve made significant developments. Things have improved a lot.
John Nelson:
And you can simply see it by the flows that have come into these type of mutual funds and ETFs. Many retirement plans are offering more of these options to their employees. Those who have dabbled in it maybe a little bit before, or weren’t all that thrilled with it even a couple of years ago, it’d be worth a second look to see if some of the new developments fit their stance and their views.
Redrick Terry:
Well, that’s a good segue to our last question. When it comes to implementing this type of investment strategy, what options would people have?
John Nelson:
Yeah, I think it’s just that there’s many options outside of say, retirement plans, but I’ll start with retirement plans because that can oftentimes be the easiest for investors to take advantage of. Retirement plans are known for bringing in or kicking out different mutual funds at different times. And a lot of these newer ones that have come into many of the bigger employer type retirement plans that most people are saving in have maybe a socially responsible aspect that they could take advantage of that. If that option isn’t available or investors are not all that thrilled with the options that are available, you could certainly seek help or look at things outside of that to take it a little bit further. But I think that would be the easiest, most realistic starting point for many investors.
Redrick Terry:
John Nelson, as always, we thank you for joining us.
John Nelson:
Thank you, Redrick, happy to be here.
Redrick Terry:
Absolutely. If you missed any part of our conversation, we’ll make it available to you at OurQuadCities.com.