The MSCI KLD 400 Social Index between July 1990 and December 2014 delivered an annualized total return of 10.14 percent, 45 basis points higher than the S&P 500. On a cumulative basis the MSCI KLD Social Index beat the S&P 500 by 102.4 percent while doing so two-thirds of the time with equal or lower volatility.
The report’s findings make it crystal clear that recommending mutual funds to your clients whose company holdings meet high environmental, social and governance standards is not only good for their conscience, it’s good for their pocketbook as well.
The report concludes with the following:
“Ultimately, our comparison indicates that investing to create a positive impact does not necessarily require making a tradeoff in investment performance; on the contrary, sustainable investments
often exhibit favorable return and risk characteristics compared to their traditional peers. We expect that, over time, the fundamental drivers of these performance differences will only grow in importance to investors, both as a way to address important global challenges and
to improve investment performance.”
So, the next time your client says they want to do some good with their money, by all means let them.