Trillions at Stake

Forthcoming April 2005 articles from Kiplinger’s – an influential investor periodical – I thought important to think through [Saddam Burgers, Anyone? James K. Glassman 1,673 words 1 April 2005 Kiplinger's Personal Finance MagazinePage pages 28, 30ISSN 1528-9729; Volume 59; Number 4].

"Trillions at stake. Enter socially responsible investing, or SRI. Not too many years ago, SRI was an eccentricity. Now it's an industry. The Social Investment Forum's latest report says that $2.2 trillion has been invested in SRI portfolios managed by professionals--up from $40 billion in 1984. There are 200 mutual funds that focus on stocks that meet ethical criteria. Many are tiny, but 55 have more than $100 million in assets and 26 have more than $1 billion".

1. Material references to KLD, differentiated from Domini, but based on Bill Baue’s earlier article mixing Domini/KLD, is this enough?
2. Reference to bad Laffer paper.
3. Describes the market moving to “one-to-one” ie customizable portfolios at the individual level, not mutual funds; implication that demand will increase for investor tools i.e. need a product to empower investors/advisors in a user-friendly way like IWF Idealswork.
4. 3 reasons why SRI not good for mutual fund investor:
a. weaker talent in money management
b. no premium company performance to capture in investment portfolio
c. SRI funds so different, hard to match to your values.

This last point SRI marketers can think through on how to sell into: moving the facts to the market, where they “build” the ratings/screens based on the investors own attitudes. Put differently traditional SRI ratings agencies can move the argument forward by addressing 3. and with help of academics/white papers
1. is not an issue for ratings agencies because they are investment agnostic.

Question for traditional SRI business is: can we deliver investor-friendly information for money managers, or does current SRI ratings still fail the “mothering” test?