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Redefining Good Investments

Updated March 15, 2021

Brandon Hellenbrand, Portfolio Manager

Social investing has a proud and storied history. It goes all the way back to the 18th century, when Quakers refused to invest in anything involved with the slave trade.

For most of the 19th and 20th centuries, concepts of improving human equality dominated the social investment space.

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In the late ’80s and early ’90s, social investing concepts began to focus on a wider spectrum of issues, such as environment, social issues, and governance (ESG). Today’s approach is no longer limited to exclusions, as analysis of ESG factors are regularly integrated into wider financial analysis.

The approach one takes to incorporate socially responsible investing into their investment portfolio can vary depending on the goals of the investor. This can be achieved by at least one of these common approaches: using exclusions, integrating ESG factors into the investment process, or embracing impact investing. Here’s an overview of each:

Exclusions: The original way to engage in socially responsible investing was to simply avoid investing in companies involved in activities that the investor is trying to avoid. A common investment strategy involves excluding “sin” stocks, such as alcohol, tobacco, weapons, and gambling. These controversial activities have evolved over time with some now including coal mining, carbon, sugar, and others.

Exclusion screening can always be customized to the preferences of the investor. Compared with the other two approaches, it is seen as the most clear-cut.

Integration: This is a more modern approach that began at the onset of the ESG revolution. The approach, in theory, would say that companies that follow the best practices of ESG will actually experience better financial returns and are more likely to succeed over the long term.

There is plenty of academic research that focuses on singular issues that conclude superior performance is achieved by companies that, for example, have a gender-di- versified board and executive team, have competitive pay for employees, or take steps to avoid environmental wastes or disasters, thus avoiding costly lawsuits and cleanup

Impact Investing: This approach is focused on making investments that have a meaningful impact on the environment or society. Examples include investing in companies involved in clean energy production or food processors focused on improving nutritional standards. The key components of impact investing include generating a positive return with measurable and transparent financial, social and environmental benefits, and the impact must be deliberate and intentional by the investor.

It’s also common to see this approach used for bonds as there is a growing market for “green bonds,” debt issued to fund a project that is determined to provide a positive impact on the environment or society. An example would include debt issued to build wind turbines to power a community or business.

How does an investor determine which method is best for them?

Generally speaking, if investors have specific criteria they want to avoid, they can most easily achieve this using the exclusion method. For investors looking to have their money invested in companies that best follow their beliefs and desires, an ESG integration strategy will work the best. Lastly, investors that want to make an immediate impact on a region, sector or specific cause would focus on impact investing.

It is also possible to incorporate parts of all three methods into a portfolio—just ask your Trust Point advisor and they will help you determine which route is best.

Trust Point’s Approach

Trust Point offers various versions of socially responsible investing portfolios to meet specific client needs. Our open architecture approach to portfolio constructions allows for flexibility while maintaining the fundamental characteristics of our investment philosophy.

We offer two methods of socially responsible investing, both of which incorporate aspects of all three approaches.

The first option consists of a globally diversified portfolio of socially responsible low-cost open-end mutual funds and Exchange Traded Funds (ETFs). This approach is consistent with Trust Point’s core non-ESG investment offerings.

The second approach leverages the expertise of an industry leader in ESG investing, allowing us to build custom portfolios that meet specific exclusion, integration and/or impact needs by owning individual stocks.

The trend towards investing beyond returns is here to stay as more investors want to use their wallets to make the world a better place or simply want to express their viewpoints or beliefs (non-investment goals in their portfolios.


One of the key services that all of our clients receive is asset allocation, or making sure their investment portfolio is diversified between stocks and bonds so that the expected risk and return of the portfolio meets their needs. We use this same asset allocation philosophy to build a diversified portfolio of ESG indicated funds.

Through our third-party partnerships and rigorous due diligence, we are able to identify investment options that incorporate some of the three social investing approaches into low-cost funds. The allocation of these various ESG funds provides us with a diversified portfolio that not only meets clients’ risk and return goals but also aligns the portfolio with the most commonly recognized ESG factors.


Understanding our clients’ goals and values is key to successfully building their investment portfolio. Our rules-based investment system/process allows us to build custom portfolios that meet very specific client needs. With the ability

to exclude individual stocks or entire subsets of the market that violate various environmental, social, governance or faith-based guidelines, these portfolios only hold the companies that meet very specific guidelines, while maintaining our asset allocation philosophy.

*Limitations Apply

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Brandon Hellenbrand, Portfolio Manager