Our newest portfolio, the Swell Impact 400, is a curated collection of companies that we have found to be the most impactful in the stock market. Think of it like a portfolio for progress.
To build the Impact 400, we rigorously analyzed thousands of companies making the biggest impact. On top of that, we made sure they also prioritize ethnic and gender diversity, provide balance through sector diversification, and address all 17 of the UN Sustainable Development Goals for protecting people and the planet.
We’ve always been unapologetically demanding in our selection process, but we also realize that impact is personal. Everything that we do here at Swell is guided by our users, and so the creation of this portfolio was no different.
A need in the market
Early on, we realized something: Our investors (and all investors, really) love diversification. This is the best method of risk management and what we were aiming for when creating this portfolio. It's easy to invest thematically in small and mid caps, but since so much innovation on the world’s biggest problems come from smaller firms, it can be hard to be diversified. So we devoted a huge effort into finding bigger firms that we are proud to call impact companies. We also added in some more small- and mid-cap companies to try and touch as many facets of the economy as possible.
Many of our investors care deeply about all 6 of our themes and choose to invest across all of our offerings. But is that the same as diversification? The short answer is no. There are a few holdings that are innovating profitably in a few different industries – AECOM is a great example. You’ll find AECOM in our Zero Waste, Renewable Energy, and Clean Water portfolios because of its work with oil companies to improve air quality and reduce emissions, and its program management for water recycling and distribution systems.
By having this company represented repetitively in your collective portfolio, you’re investing more of your money proportionally than in a company who is just in one of our themes.
How we use user research
We set out to create an end-to-end solution that was not strictly thematic and offered a more balanced option for people ready to invest more broadly across the market.
We started with 4 ideas:
Equities and Treasury bonds, equities and international corporate bonds, a savings account with a guaranteed high rate, and what we now call the Impact 400.
We presented our users with the 4 options and explained what they each held and their individual risk and return profiles. Then we gave them $5,000 in paper money and let them literally vote with their dollars for which of the options they liked the most.
The Impact 400 option was the clear winner because of its diverse holdings. Our users opted not to invest in Treasury bonds during a shaky political climate, weren't fans of the risk and perception of lower impact in the international option, while our younger investors just flat out didn’t want bonds.
With a sense of this new product, we moved on to the messaging aspects of the test. How could we convey that we believe this product to be safer without shading our other offerings? How many companies are out there really, truly making an impact, and can we find enough of them to achieve the balance we want?
Our research team dug in and looked at tens of thousands of companies to find just a few hundred that met our criteria. The companies needed to meet these requirements:
- Have at least one woman or minority on the board or in the C-suite
- Derive revenue from business aligned with the 17 UN Sustainable Development Goals
- Represent a broader sector then we’ve previously explored
When it was all said and done, we ended up with a cool 399 companies. Because we always want to reflect the voices of our entire community, we’ve put the final company up to a vote. We narrowed it down to two contenders: Starbucks and Apple.
Apple was the winner with more than 70% of the vote.