Invest in What Matters
By Luma Wealth on June 29, 2020
Align Your Values with Value
One result of the coronavirus pandemic is that we are witnessing the connection between our actions and the environment. With most of the world in lockdown for weeks, greenhouse gas emissions are down, air and water quality have improved1 and we’re hearing anecdotes about people seeing more wildlife, including jellyfish swimming in the Venice canals and sea turtles nesting on Florida beaches.
If these changes motivate you to do even more to promote sustainability in your everyday life, whether that includes recycling, buying local or drinking from reusable water bottles, you may want to learn more about impact investing.
What is Impact Investing?
Impact investing is investing with the intention to generate positive social or environmental benefits as well as a financial return.2 To do so, impact investments consider a range of environmental, social and corporate governance factors (ESG) in addition to the traditional financial variables used in investment analyses.
How Impact Investments Perform
It is a common misperception that investors must sacrifice value to invest with their values. In fact, research suggests that the added level of ESG screening includes factors that contribute to long-term performance and may identify better-managed companies with fewer risk exposures.2
ESG vs. Conventional Equity Funds
In the first quarter of this year, the financial markets experienced a significant decline for the first time in a long time. And as you can see in the graphic, below, equity funds that include ESG factors generally outperformed conventional funds in this time frame of decline. The difference in performance was likely due to the inherently lower risk and increased interest in these funds.
How You Can Align Your Values with Value
If the pandemic has you thinking more about what you can do to make the world a better place, your Luma Wealth team would be happy to speak with you about the opportunities in impact investing.
You don’t have to give up value to invest with your values. Discover how to extend your sustainable lifestyle choices to include investing by contacting your Luma Wealth advisor.
