Does investing in impact mean that I should expect lower returns?

Investors want good returns. Swell investors want good returns and investments that make an impact. The Swell team aims to deliver profit as well as purpose by investing in companies that are both poised for high growth and addressing global issues.

From an investment point of view, this means that value and risk can be more concentrated than the general stock market. In the long run, thematic investing can produce investment returns greater than the broad market return; however, it is also possible that losses may be higher. Thematic investing should be seen as a way to add diversity to an overal financial mix that includes savings, retirement products and other equity and fixed income investments.

It is also worth noting that the oldest US stock index using environmental and social considerations has clearly shown that ESG can actually create added value. In fact, since its birth in 1990, the Domini Social Index (DSI)—now known as the MSCI KLD Social 400 Index—has outperformed both the S&P 500 and the Russell 3000 on an actual and risk-adjusted basis for 25 years. 

Extensive academic research and empirical data have shown that socially responsible investing can have a positive, not negative, impact on portfolio returns. Take a look at the resources below!


Davidson, Alex. “‘Sustainable Investing’ Goes Mainstream.” The Wall Street Journal. January 13, 2016. 

diBartolomeo, Dan. “Equity Risk, Default Risk, Default Correlation and Corporate Sustainability.” Journal of Investing, March 2011.

Eccles, Robert and Serfeim, George. “The Performance Frontier: Innovating for a Sustainable Strategy.” Harvard Business Review. May 2013.

Edmans, Alex. "Does the stock market fully value intangibles? Employee satisfaction and equity prices." Journal of Financial Economics. December 2010.

Gunnar Friede, Timo Busch & Alexander Bassen (2015) “ESG and financial performance: aggregated evidence from more than 2000 empirical studies.” Journal of Sustainable Finance & Investment, 5:4, 210-233 

Gordon Clark, Andreas Feiner & Michael Viehs."From the stockholder to the stakeholder: How Sustainability Can Drive Financial Outperformance." University of Oxford. March 2015. 

Mozaffar Khan, George Serafeim & Aaron Yoon (2016) "Corporate Sustainability: First Evidence of Materiality." The Accounting Review, 9, 1697-1724

“Sustainable Reality: Understanding the Performance of Sustainable Investment Strategies.” Morgan Stanley Institute for Sustainable Investing. March 2015. 

“Socially Responsible Investing: Can you do Well by Doing Good?” Charles Schwab. November 10, 2016.

"Responsible Investing: Delivering Competitive Performance" TIAA Global Asset Management. April, 2016.

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