Using “the force” to invest: SRI aligns investments with your values
as published in the Racine Journal Times | January 2, 2018

In the latest Star Wars movie, “The Last Jedi,” there’s a scene that takes place in a fictional city, Canto Bight, where one of the characters reacts in disgust at the opulence and luxury because the source of much of the wealth is from selling armaments. In reality, there are people who share this disdain, too. Rather than shying away from investing altogether out of distaste, there are approaches to investing that exclude companies that are not aligned with your personal values.SRI

Socially responsible investing (SRI) has been around for decades and, according to the Forum for Sustainable and Responsible Investing, there is over $8 trillion invested based on this approach. By specifically excluding certain types of companies, investors are still able to benefit from the wealth creation opportunities of the stock market.

SRI is a fairly broad strategy that typically focuses on social, environmental or corporate governance issues. Mutual funds that follow this strategy may focus on only one of these issues such as protecting the environment by excluding companies that have a history of polluting the environment.

Historically, SRI funds took an exclusionary approach that focused on removing companies from their portolios involved in industries such as gambling, tobacco or firearms. More recently, they’re also focused on including companies that follow certain practices that preserve the environment or have a positive impact on their communities. The result is a proliferation of mutual funds that describe themselves as socially responsible.

When compared to non-SRI funds, the performance is comparable although there can be periods when the returns vary widely. One disadvantage to following a socially responsible approach is the additional cost that mutual funds incur for the extra due diligence required to screen companies. This results in operating expense ratios that can be a bit higher than comparable funds without the screens. Another potential disadvantage is less diversification because you’re intentionally limiting the available companies to own.

In addition to mutual funds that focus on U.S. headquartered companies, there are also funds that invest in foreign companies as well as different types of bonds. In theory, you could build an entire portfolio of socially responsible mutual funds.

While you may not travel to a galaxy far, far away, you also don’t have to go very far to find investments that match your personal values. To learn more about this investment approach, visit the Forum for Sustainable and Responsible Investing’s website at

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