Occasionally I hear someone say to me, “why invest in Summa fund, when this other fund does better?” This is usually spoken by the performance chasers. They are the ones that will boastfully speak of how they made “a killing” on a certain stock or fund, but never talk about the investments that didn’t work out. Like the gambler who talks about his big winnings but doesn’t mention the thousands he’s lost over the years.
The fact is that 91.5% of a portfolio’s variability depends on asset mix, not stock selection (Source: Brinson, Singer, Beebower Study,Financial Analysts Journal, Feb ’91). What does that mean? It means that a well-designed portfolio with a good asset mix will get you long-term results. Don’t be fooled by chasing “winners”. Last year’s winner is often this year’s loser.
So how does this relate to green investing? You can include SRI funds in your portfolio as part of a well-structured, diverse portfolio and still get productive results over the long term. If you chase results, you have often already missed the opportunity, not to mention the fact that you will spend all of your time watching the markets and pulling your hair out.
So if performance is based on the asset mix and you have the opportunity to include green companies as part of that asset mix, what’s your excuse for not including an SRI fund in your portfolio?
If you have any questions, please call me.
Darcy Feth is a consultant with Investors Group - they believe you can invest for both performance and social good at the same time. He can be reached at 250.762.3329 Ext. 374 or toll free at 1.877.541.2255 or via email: darcy.feth@investorsgroup.com
