Here’s the truth: All investments have an impact. And when you don’t keep tabs on what assets you own, you risk using your financial power to support causes that conflict with your own values. Your capital might be used to support companies that pollute the planet, profit from war, or hold women and/or people of color back. That means you’re advancing financially because those companies are advancing. No thank you.
But when you’re intentional about your investments, you get to call the shots on what causes your own money is advancing; you purposefully invest for a positive impact — and for competitive returns. Impact investing is an incredibly fast-growing sector for that reason. Investors have realized that they can align their portfolios with their values, while holding industry leaders accountable, while capitalizing on a better financial performance that research has shown comes with companies with good business practices. In other words, impact investing can be a good financial choice as well as a moral one.
Today, Ellevest Private Wealth Management clients can actively direct their money into positive impact investments across their entire portfolio in all three major asset classes: equities, fixed income, and private alternatives. Here’s a guide to how we make that all possible:
1. Intentional investing with equities
The Ellevest Intentional Impact Equity Strategy & portfolios
For clients who want to: invest more meaningfully in the causes they care about (and divest from causes they don’t).
How Ellevest makes it possible: A typical Ellevest Intentional Impact portfolio is made up of investments in roughly 300 companies, each of which is individually evaluated according to strict environmental, social, and governance (ESG) criteria. That evaluation is based on an abundance of data thanks to our partners at Ethic, which allows us to continually re-evaluate, move quickly, and seek to ensure the information we’re relying on is as unbiased as possible. If a company falls short in any of these criteria — identified by 13 focus areas, from Workplace Diversity to Greenhouse Gas Emissions to Labor Relations — we exclude it from the portfolios.
Read more about the Ellevest Intentional Impact portfolios here.
The Ellevest Climate-Conscious Impact Equity Strategy & portfolios
For clients who want to: invest more meaningfully with a greater climate-specific approach.
How Ellevest makes it possible: A typical Ellevest Climate-Conscious Impact portfolio is made up of investments with companies that pass a set of criteria geared toward environmental sustainability. Those criteria fall under five main pillars — clean water, climate change (aka carbon footprint), sustainable agriculture, pollution, and deforestation — which then divide into 13 even more specific subcategories. Like the pillars we use to build the Ellevest Intentional Impact portfolios, these are also backed up by a wealth of data thanks to our partners at Ethic.
Read more about the Ellevest Climate-Conscious Impact Equity Strategy here.
The Ellevest custom equity portfolios
For clients who want to: invest more meaningfully with specific impact goals in mind.
How Ellevest makes it possible: We can also design a customized strategy to align with your values. To do that, we start by building out a personal mission statement and evaluating how public companies’ behaviors align with your impact objectives. For example, your portfolio could invest in companies committed to racial justice, prison reform, and gun control.
Reach out to us about the Ellevest custom equity portfolios here.
2. Intentional investing with fixed income
The Ellevest Municipal Impact Strategy, managed by AllianceBernstein®
For clients who want to: invest in municipal bonds that fund projects geared toward environmental and social impact, to help make local economies more inclusive, equitable, and sustainable.
How Ellevest makes it possible: We take the daunting work out of choosing bonds for impact (the muni market currently stands at roughly $4.1 trillion, with more than a million outstanding individual bonds, most of which aren’t always slated to fund projects geared toward environmental and social impact) by selecting each municipal bond for your portfolio based on its ability to create a specific, measurable environmental and/or social impact in at least one of six key focus areas: primary and secondary education, health care, electric utility, water and sewer, mass transportation, and economic community development. This strategy allows clients to invest in municipal bonds that seek to offer both portfolio stability and tax-advantaged income while seeking to deliver environmental and social impact in historically marginalized communities, with the specific goal of reducing existing gaps in areas like academic achievement, economic development, and health care.
Read more about the Ellevest Municipal Impact Strategy, managed by AllianceBernstein®, here.
3. Intentional investing with private alternatives
The Ellevest private alternatives
For clients who want to: use private capital to address some of the world’s largest societal and environmental issues with long-term nontraditional assets that also have the potential to achieve financial returns.
How Ellevest makes it possible: We customize the allocation of your alternatives based on the specific issues you care about in order to seek to reduce overall portfolio risk, enhance returns, generate income, and create positive social and/or environmental change at the same time. In some cases, we’ve even found alternative investments where the goal is to close more than one social or environmental gap — for instance, investing in alternatives in sustainable agriculture may be doing good for both the climate and local communities — creating the potential for a triple bottom line.
Read more about impact alternatives in this whitepaper written by Ellevest Chief Investment Officer Dr. Sylvia Kwan.
Why invest for impact with Ellevest?
A returns-first approach
. We design portfolios to help advance underserved communities and important causes without sacrificing your financial goals.A women-first approach
. We invest in women and the causes that prioritize and advance them — after all, we’re a “by women, for women” financial firm.A highly personalized approach
. We work with each client one-on-one to understand their financial and impact-investing goals and create a custom investment strategy designed to hit both.A proactive approach
. We don’t wait for competitors or the market to produce the opportunities we want for our clients. We push others in the industry to change, and use our visibility, influence, resourcefulness, and investment experience to innovate and collaborate with other mission-aligned firms to bring new impact investing solutions to people and institutions — seeking to ensure these solutions meet our high standards as we go.
Investing intentionally for both impact and returns is well within reach. If you would like to learn more about Ellevest Wealth Management, how we help our clients build their wealth, and our values-aligned investment strategy, you can schedule a call with us here.
© 2024 Ellevest, Inc. All Rights Reserved.
The Ellevest Municipal Impact Portfolio (“Portfolio”) is a separately managed account that is sub-advised by AllianceBernstein Holding L.P. (“AB”), a SEC registered investment adviser.
The Portfolio is a national municipal investment strategy comprised of individual municipal positions (approximately 55%) and an allocation to a diversified pooled fund of municipal bonds (approximately 45%). The Portfolio will include issuers from different states and not be limited to issuers from a single state. Hence, income generated by the investments in the portfolio will be tax exempt from Federal taxes, but only positions issued by the client’s state of residence, if any, will be exempt from state tax.
The impact objective of the strategy is to deliver positive social and environmental impact in sectors including but not limited to education, healthcare, low carbon/renewable energy, mass transit, water/wastewater management, and economic/community development. The Sub-advisor pursues its objective by investing principally in high-yielding municipal securities of any credit quality that (i) score highly on the Sub-advisor’s environmental, social and corporate governance (“ESG”) criteria (which can be made available upon request) and (ii) are deemed by the Sub-advisor to have an environmental or social impact in underserved or low socio-economic communities. The Sub-advisor utilizes a use-of-proceeds approach, in which each investment has a specific intention delivering positive environmental and/or social impact which must be measurable.
Risks To Consider
Market Risk: The market values of the portfolio’s holdings will fluctuate based on economic and market conditions.
Municipal Market Risk: Debt securities issued by state or local governments may be subject to special political, legal, economic and market factors that can have a significant effect on the portfolio’s yield or value.
Interest Rate Risk: As interest rates rise, bond prices fall and vice versa, long-term securities tend to rise and fall more than short-term securities.
Credit Risk: A bond’s credit rating reflects the issuer’s ability to make timely payments of interest or principal — the lower the rating, the higher the risk of default. If the issuer’s financial strength deteriorates, the issuer’s rating may be lowered and the bond’s value may decline.
Inflation Risk: Prices for goods and services tend to rise over time, which may erode the purchasing power of any income generated from these investments.
Derivatives Risk: Investing in derivative instruments such as options, futures, forwards or swaps can be riskier than traditional investments, and may be more volatile, especially in a down market.
Liquidity Risk: The difficulty of purchasing or selling a security at an advantageous time or price.
Local Economy Risk: This portfolio may contain municipal securities issued by the Commonwealth of Puerto Rico as well as other local governments whose current economic conditions could exacerbate the risks associated with investing in these securities.
ESG Risks: Applying ESG, impact and sustainability criteria to the investment process may exclude securities of certain issuers for nonfinancial reasons and, therefore, the Fund may forgo some market opportunities available to funds that do not use ESG, impact or sustainability criteria. The fund is only available in separately managed accounts or participants in “wrap fee” programs.
The minimum investment in the Ellevest Municipal Impact Portfolio is $250,000. In addition to Ellevest’s advisory fee, the client will pay 0.23% of assets managed to the Sub-adviser.
The Ellevest Intentional Impact Portfolio is a separately managed equity account that is sub-advised by Ethic, Inc., a SEC registered investment adviser. As sub-adviser, Ethic constructs and manages portfolios of individual stock positions benchmarked to an underlying index and customized to specific values criteria. The sub-adviser seeks to deliver equity market returns that track closely with a designated equity benchmark (domestic and / or international) while outperforming on impact across key sustainability criteria as defined by Ellevest and / or the client.
The Ellevest Intentional Impact Portfolio is expected to comprise around 300 US-listed equities (including ADRs as applicable) chosen through an outsourced multi-factor optimization software and sustainability data science developed by Ethic to seek to minimize tracking error.
The sustainability criteria is based on risks in the following categories: Ethics and Fraud, Firearms, Excessive Remuneration, Exploitative Products, Greenhouse Gas Emissions, Human Rights and Community (including private prisons), Labor Relations, Product Quality and Safety, War, Waste, Working Conditions and Workplace Diversity (including gender metrics on low employee representation, low management representation , and low board representation.
The Ellevest Intentional Impact portfolios uses the divestment recommendations created by the American Friends Service Committee to identify and screen out companies for practices around the private prison ecosystem. Those recommendations are based on an assessment of three criteria: the salience of the human rights violation, the company's responsibility for the violation, and the company's responsiveness to stakeholders’ concerns about the violation.
A firm reporting that more than 5% of their revenues are from firearm sales will be screened out. Note that not all companies report their revenues from gun sales, so we can’t guarantee that you will be fully divested from firearms.
The primary potential benefit of the Ellevest Intentional Impact Portfolio is that it seeks to provide broad market exposure with a goal of keeping average tracking error low over the long term, less than 1.50%, while divesting from companies that do not meet the strategy’s sustainability parameters. The tracking error may be meaningfully higher if the equity allocation is transitioned over time due to tax or other considerations or if the customized sustainability criteria specified by the client overly restricts the investable universe of securities.
Some of the key risks for investing in the Ellevest Intentional Impact Portfolio include:
Market Risk
As with all publicly traded securities, the SMA is exposed to market risk, the risk of losses arising from fluctuations in market prices caused by factors independent of a security’s particular underlying circumstances.
Active Risk
Although the SMA is constructed to minimize tracking error relative to its benchmark, there is no assurance that the strategy will generate market returns within the estimated tracking error. Because the SMA is designed to capture investment returns associated with gender and racial diversity, and high environmental and governance standards, the SMA may exclude, overweight, or underweight individual companies and/or sectors of the market. As a result, the SMA will not fully participate in the market returns of a general investment strategy. The SMA may over or under perform a general market strategy.
Sub-Adviser Risk
The success of an account’s investment through sub-advisers is subject to a variety of risks, including those related to the quality of the management of the sub-adviser and the ability of such management to develop and maintain a successful business enterprise, and the ability of the sub-adviser to successfully execute, operate, and manage the intended strategy at or below the target tracking error.
Business Risk
The fund’s strategy relies on key personnel, their expertise, relationships and networks. A loss of one or more key personnel may adversely impact the strategy.
The Ellevest Intentional Impact Portfolios give clients access to broad equity market exposure. The target tracking error for the Portfolios is currently under 1.50%. Reporting on the Ellevest Intentional Impact Portfolios will be provided to clients no less than annually.
The minimum investment in the Ellevest Intentional Impact Portfolio is $250,000. In addition to Ellevest’s advisory fee, the client will pay 0.30% of assets managed to the Sub-adviser.
The Ellevest Climate-Conscious Impact Strategy is a separately managed equity account that is sub-advised by Ethic Inc. Ethic Inc. is registered as an investment adviser with the Securities and Exchange Commission (“SEC”) and is located in New York, NY. Registration of an investment adviser does not imply any level of skill or training. Information pertaining to Ethic Inc’s registration or to obtain a copy of Ethic Inc.’s current written disclosure statement discussing Ethic Inc.’s business operations, services and fees is available on the SEC’s Investment Adviser Public Information website –www.adviserinfo.sec.gov or from Ethic Inc. upon written request at support@ethicinvesting.com.
Information provided herein is for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Any subsequent, direct communication by Ethic Inc. with a prospective client shall be conducted by a representative of Ethic Inc. that is either registered or qualifies for an exemption or exclusion from registration in the state where a prospective client resides. Information contained herein may be carefully compiled from third-party sources that Ethic Inc. believes to be reliable, but Ethic Inc. cannot guarantee the accuracy of any third-party information.
Ethic Inc. does not render any legal, accounting, or tax advice. Ethic Inc. recommends all investors seek out the services of competent professionals in any of the aforementioned areas. Ethic Inc. cannot provide any assurances that any investment strategies, simulations, etc. will perform as described in our materials. ALL INVESTMENTS INVOLVE RISK, ARE NOT GUARANTEED, AND MAY LOSE VALUE. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY.
Ethic Inc. and your adviser’s firm are independent entities and neither is the agent of the other. Your adviser is not an employee or associated person of Ethic Inc. and has no authority, express or implied, to act for or obligate Ethic in any manner whatsoever. Account portfolios are prepared by Ethic Inc. based on information provided through your adviser.
As sub-adviser, Ethic constructs and manages portfolios of individual stock positions benchmarked to an underlying index and customized to specific values criteria The sub-adviser seeks to deliver equity market returns that track a designated equity benchmark (domestic and / or international) while seeking to outperform on impact across key sustainability criteria as defined by Ellevest and / or the client.
The Ellevest Climate-Conscious Impact Strategy is expected to comprise around 300 US-listed equities (including ADRs as applicable) chosen through an outsourced multi-factor optimization software and sustainability data science developed by Ethic.
The primary potential benefit of the Ellevest Climate-Conscious Impact Strategy is that it provides broad market exposure with a goal of keeping average tracking error low over the long term, less than 1.75%, while divesting from some of the companies that do not meet the strategy’s sustainability parameters. The tracking error may be meaningfully higher if the equity allocation is transitioned over time due to tax or other considerations or if the customized sustainability criteria specified by the client restricts the investable universe of securities.
Some of the key risks for investing in the Ellevest Climate-Conscious Impact Strategy include:
Market Risk
As with all publicly traded securities, the SMA is exposed to market risk, the risk of losses arising from fluctuations in market prices caused by factors independent of a security’s particular underlying circumstances.
Active Risk
Although the SMA is constructed to minimize tracking error relative to its benchmark, there is no assurance that the strategy will generate market returns within the estimated tracking error. Because the SMA is designed to capture investment returns associated with gender and racial diversity, and high environmental and governance standards, the SMA may exclude, overweight, or underweight individual companies and/or sectors of the market. As a result, the SMA will not fully participate in the market returns of a general investment strategy. The SMA may over or under perform a general market strategy.
Sub-Adviser Risk
The success of an account’s investment through sub-advisers is subject to a variety of risks, including those related to the quality of the management of the sub-adviser and the ability of such management to develop and maintain a successful business enterprise, and the ability of the sub-adviser to successfully execute, operate, and manage the intended strategy at or below the target tracking error.
Business Risk
The fund’s strategy relies on key personnel, their expertise, relationships and networks. A loss of one or more key personnel may adversely impact the strategy.
The Ellevest Climate-Conscious Impact Strategy gives clients access to broad equity market exposure. The target tracking error for the Portfolios is currently under 1.75%. Reporting on the Ellevest Climate-Conscious Impact Strategy will be provided to clients no less than annually.
The minimum investment in the Ellevest Climate-Conscious Impact Strategy is $250,000. In addition to Ellevest’s advisory fee, the client will pay 0.30% of assets managed to the Sub-adviser.
Information was obtained from third-party sources, which we believe to be reliable but not guaranteed for accuracy or completeness.
The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.
The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.
Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.