Historically investors focused on allocating their capital with the goal of increasing monetary wealth. This mindset has evolved over time to look beyond capital gains. Now, investors understand that allocating capital is also a way to express their belief that an investment can be a means to support, accelerate or push for change. This second motivation is often referred to as Socially Responsible Investing (SRI).
The Etergino Group’s philosophy of “Connecting Wealth with Purpose” goes hand-in-hand with SRI. We take great pride in the relationships we have built with individuals and organizations to design customized investment portfolios with the aim of achieving maximum risk-adjusted returns while also choosing investments that are aligned with our clients’ specific values and mission. This is the essence of SRI, as well as our client service model.
More recently, The Etergino Group has worked with clients to apply their specific social responsibility criteria to their investments. Together we have designed portfolios that specifically consider racial inclusion and diversity – especially when it comes to investing with women- and minority-owned asset managers.
The lack of minority investment managers is a gap that must be addressed. A study led by the Knight Foundation found that diverse-owned firms comprise a small share of all firms and an even smaller fraction of the $51 trillion assets under management (AUM) in US-based mutual funds. Women-owned firms represent 10.0% of all firms and just 0.8% of total AUM. Minority-owned firms, which make up 8.7% of firms and only 0.4% of AUM, have lower representation compared to women-owned firms.
Similar findings are echoed in a variety of reports, including a US Government Accountability Office report that showed that investment firms owned by women and people of color manage less than 1% of the $70 trillion in US assets under management across all funds (NYT). In contrast, women and people of color make up about 70% of the US population as of 2018.
For over a decade, The Etergino Group has worked with a national association to structure their investment portfolio with a clearly stated mandate to invest with minority asset managers whenever possible. The association’s aim is to rectify decades of institutional discrimination within the investment management industry. The association is a pioneer among socially responsible investors, and we are proud to be associated with them.
One common SRI myth is than SRI strategies have less competitive returns. In fact, when the Knight Foundation began asking about the ownership of investment firms as part of its due diligence process, the foundation took issue with the assumption that minority- and women-owned firms had lower returns. “The data doesn’t bear that out,” replied Juan J. Martinez, the Knight Foundation’s chief financial officer. In fact, they found that diverse-owned funds are over-represented among the top performance quartiles for their asset classes.
The Etergino Group has a longstanding history of working with clients to pursue their financial goals while reflecting their values in the portfolio. SRI has become a major force in the investment community, and The Etergino Group is ready and able to work with you to develop investment solutions that further your organization’s mission and principles.