Wait, my investment portfolio owns what

April 13, 2017

Now, fully customizable, filtered investment portfolios are an obtainable reality.



If you own shares in mutual funds, ETFs, or have any exposure to an index, understanding all of the companies that you invest in and their potential link to unethical (or at the very least disagreeable undertakings) is a complete mystery to you.  If you own individual stocks, you may be surprised to know that many well-known “blue-chip” companies may have some revenue streams from activities that could absolutely be considered unethical or not socially conscientious.  Unfortunately, the wide-world of finance generally does not distinguish between what is ethical or unethical when it comes to growth potential or an opportunistic risk/reward profile of an investment.


Investors and their advisors largely make decisions based upon these inarguably important surface-level risk and return characteristics.  


However, because no thought is normally given to the investments from a screening perspective, it is almost assured that most are not only investing in, but unknowingly affirming business practices that are quite disagreeable to them.

If you would not actively support a cause or business practice, why then is your investment nest egg doing just that?


Investment screening as an idea has been around for a good while but in the past, it has not been very effective in practice.  Take the S&P 500 Index for example. The research capability and technology needed to screen its 500 companies on a consistent ongoing basis, looking on a granular level at each company to scrutinize their ever-changing multitude of revenue streams and business practices was a daunting task. This led the early pioneers of the strategy to create some screened mutual funds within only certain manageable investment categories like “large sized company U.S. stock”. One issue with this approach was that it is impossible to build a well-diversified portfolio only utilizing a few specific investment sectors or asset classes. Additionally, there was widespread skepticism about the true filtering capability of these investment vehicles coupled with returns (compared to peers) that weren’t compelling enough to spur investment.


From an activism standpoint, the first-step towards truly creating change is to not support causes you disagree with. Where you choose to invest your hard-earned accumulated wealth is no different.


We have the ability to screen for and filter out of your investments a multitude of varying business practices and activities. To name some of the most prominent: non-family oriented entertainment, tobacco/alcohol, energy (oil/gas) and nuclear power, abortion, gambling, weapons manufacturers (if you don’t want land mines in your portfolio - but really, we can actually screen specifically for landmine companies), stem cell research, and Sharia Law. Unfortunately, these exposures can be more present than imaginable within a traditional asset allocation portfolio. These individual screening categories can be combined to form a much more wide-reaching conceptualized underlying portfolio objective like a portfolio following a strict “Biblically Responsible Investing” mandate or environmental philosophy for instance.  The only restriction to accomplish a fully screened portfolio is that the account minimum is $500,000.  This minimum is not an arbitrary figure. Because the screening takes place on a company-by-company basis (including stocks and bonds), scale is required to build a fully diversified portfolio that we are confident in.


Imagine a scenario where you know, without a doubt, that your investments are completely filtered to your unique beliefs and preferences while still being an efficiently allocated portfolio to meet your financial planning objectives. Fully customizable, filtered investment portfolios are no longer a distant but beautiful mirage; now they are an obtainable reality.


The Malick & Lippert wealth advisory team at Strategic Financial Partners in Colorado Springs may be reached at 719-388-0250.




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