Guide to
Impact Investing

When diving into socially responsible and ethical investing, it can be tough to navigate the terms and ideas that are tossed around. Impact Investing creates an intentional selection of holdings with a keen eye toward progress.

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Impact Investing 101: What is Impact Investing?

Impact Investing refers to investments “made into companies with the intention to generate a measurable, beneficial, social or environmental impact alongside a financial return.” There are two primary reasons that you might choose Impact Investing. One, you are conscious about how your money impacts the world, and two, you want to use your dollars to support social change.

Performance: Will I have to sacrifice returns?

Not at all. You absolutely can make an impact without sacrificing returns. The MSCI KLD 400 Social Index is comprised of companies with high ESG ratings and avoids companies incompatible with specific values-based criteria. This index, which is the oldest ESG index in the US, has shown that ESG can create added value – by outperforming the S&P 500 for the last 27 years.

Selection Process: Identifying

Impact Investing is Thematic Investing. Impact Investing portfolios generally have themes that are focused on issues such as curing cancer and preventing excess waste.

Journey of a dollar : Where does my money go when I invest?

When you invest in a company by purchasing stock, you own a little part of that company. Here’s how it all works:
When you invest in a portfolio of stocks
When you choose to invest your money in a company, they use it to grow their business and fund new projects. Take the water technology company, Xylem, for example...
You’re investing in innovation
With the money Xylem has received from investors, they’ve created the Saajhi Pump – a pedal-powered water pump that helps farmers irrigate their crops and increase their yield by 3 times as much compared to rainfed crops.
The technology helps the people who need it most
The Saajhi Pump is a good product that works well, thanks to research and development. The demand for the pump is high because it reduces labor time by 25% or more and allows communities to reduce their water usage by 40%.
As profits increase so do potential returns
Xylem turns a profit and the value of their company increases; so, in turn, does the value of their stock. Because you own a piece of the company, you are entitled to a share of the profits.

Measuring Impact : What impact are the companies making?

One advantage of investing with an impact-focused company, such as Swell, is that our portfolio managers do the heavy lifting. We identify the companies that are both making an impact and are poised for growth, and include them in our basket of holdings. This marriage of purpose and profit sits at the heart of Impact Investing.
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When you’re ready to invest your money, you’ll want to do it the right way.

Managing your own investments may not be right for you, and perhaps you don’t want to work with a financial advisor either. New companies, like Swell Investing, are making it easier for people to invest with their values. Dip your toe into Impact Investing with $50 or $50,000, whatever feels right to you. Low fees and thematic portfolios make it nice and easy to dive in and make a difference.
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This guide is provided by Swell Investing LLC, an SEC registered investment adviser. Brokerage services provided to clients of Swell Investing LLC by Folio Investments, Inc., an SEC registered broker-dealer and member FINRA/SIPC. The information contained in this guide is provided for general informational purposes. Nothing is this guide should be construed as tax advice, an offer, solicitation or recommendation to purchase or sell any security. This guide is not intended as investment advice, and Swell does not represent in any manner that the circumstances described herein will result in any particular outcome. Investment advisory services are only provided to investors who become Swell clients. Any past performance provided is for illustrative purposes only and is not indicative of future investment results. As with any investment, there is the potential for profit and the risk of loss.
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Swell and its broker-dealer/custodian, Folio are regulated by the SEC. We follow a strict set of rules designed to protect our investors' accounts.
Swell's broker-dealer/custodian, Folio, is a member of FINRA and SIPC. Securities in your account are protected up to $500,000.