The following is in response to Robert Huebscher’s article,The Downside to Socially Responsible Investing, which appeared on November 13, 2012:
Dear Editor,
Mr. Huebscher is pointing out the potential pitfalls of environmental-, social- and governance-based investing (ESG), rather than saying investors shouldn’t consider ESG factors. I agree with Huebscher on most every point. ESG shouldn’t be over-emphasized; and it’s not a panacea. Rather, investing is a discipline of balance – excess return expectations, traditional measures of active risk, and ESG considerations should be simultaneously balanced. I’d also agree the use of ESG isn’t one-size-fits-all, as Huebscher noted in his example about nuclear energy. Working with your client to understand their values is paramount. Lastly, we agree that ESG integration shouldn’t command a substantial premium; in fact, in our business, we price ESG strategies in-line with our non-ESG strategies.
I like the close to your article: Have the investor donate what he/she saves in fees to charity. In fact, we take 2-3% of fees collected on our ESG strategies and give the money to charity. ESG can be done effectively.
The results of our ESG strategies – both large-cap and smid-cap – argue against the myth that responsible investing equates to performance surrender.
Best regards,
Jon Quigley, CFA
Co-Chief Investment Officer, Managing Partner
Advanced Investment Partners
Safety Harbor, FL
Advanced Investment Partners is an asset manager specializing in US equity-based strategies.
