A platform will be launched next month offering what is being touted as the first socially conscious and sustainable-investing account in the financial services industry.
Envestnet Asset Management of Chicago will offer mutual funds and exchange traded funds comprising companies that are socially conscious and have strong environmental records.
Among the managers that plan to participate are Calvert Group Ltd.,
Neuberger Berman LLC and Domini Social Investments LLC.
Stocks of companies that manufacture weapons, produce alcohol, generate nuclear power or produce adult entertainment or tobacco products will be excluded from the platform.
Envestnet has $50 billion in assets under management.
Bill Crager, president of Envestnet, came up with the idea for the platform after he watched former vice president Al Gore's film on global warming, "An Inconvenient Truth." Soon after, Mr. Crager noticed that retailers were beginning to feature green sections in their stores.
'REAL MOMENTUM'
So far, 450 broker-dealers and hundreds of advisers plan to use the platform. "There is a real momentum toward thinking more consciously toward the world we live in," Mr. Crager said.
The demand for socially conscious investment opportunities was reflected in a survey from Allianz Global Investors Distributors LLC of New York revealing that most investors (73%) viewed environmental-technology companies favorably. In addition, 50% planned to make green investments this year. The survey reflected the views of 1,003 investors.
Those values remain high on some investors' priority lists.
"The sustainability issues are at the forefront of people's concerns," said Patricia Farrar-Rivas, chief executive at Veris Wealth Partners LLC, a one-year-old advisory firm that specializes in socially conscious investing.
About 90% of portfolios will have holdings that were purchased on the platform, she said. "[Socially conscious investing] is moving more and more into the mainstream, which is very positive."
Veris Wealth Partners of New York has $450 million in assets under management.
Prior to helping launch Veris, Ms. Farrar-Rivas was a director at Frank Rimerman Advisors LLC of Palo Alto, Calif., where 20% of the clients requested restricting their portfolios to companies that are environmentally sound and socially conscious.
The Envestnet platform is of particular interest to Michael Lent, a financial adviser at Veris, because for the last decade, he has searched for a socially conscious platform that offers several investment options.
"Most of my clients are looking to invest based on their values," he said. "[The platform] is very robust in terms of the brand and depth of its offerings."
PERFORMANCE ANGST
There are concerns, however, over how well the investments will perform.
"There are not many compelling investment options that are put through these strict screens," said Rick Stout, managing director for Benchmark Wealth Management LLC of Old Lyme, Conn. "You have to be willing to accept a fair amount of lower returns and volatility."
Benchmark Wealth Management manages more than $100 million in assets.
A challenge to socially conscious investing and the Envestnet platform is that each investor defines the term in a slightly different fashion.
"What is socially responsible for one is not socially responsible to another," Mr. Stout said.
For instance, a stock of a company that supports abortion rights might offend devout Catholics but not other investors.
But these concerns do not deter Mr. Crager, who predicted that the platform will bring in at least $1 billion in assets in 2008. Socially conscious investing is more than a trend, he said. "I don't think this is going to happen and [then] go away."
Once the Envestnet platform is launched, there will be advertising in print publications and a website geared toward such investing.
Andrew Coen can be reached at [email protected].
