One of BSW’s core philosophies is that asset allocation is the primary driver of long-term performance. The firm offers its clients active impact investments in several key areas:
• Stocks that are screened to target companies whose products and services are beneficial to the world and address significant environmental and social issues.
• Bonds that have a positive social impact.
• Direct real estate investments in sustainably managed, multifamily residential, office and low-income housing.
• Non-traditional investments in lower volatility strategies designed to complement the other asset classes.
• Private equity and venture capital investments, including direct investments in early- and growth-stage private companies.
“Our roots are in traditional investing. We use the same rigor, due diligence standards and return expectations for impact portfolios that we use for traditional portfolios,” says Wolf. “Applying the same metrics is what will truly enable sustainable investing to be sustainable.”
The firm’s showcase impact offering is one that Wolf developed in response to client demand for a relatively liquid and transparent fixed-income strategy that would provide safety, as well as reliable returns, during periods of economic volatility. Because he couldn’t find a product that fit that description, Wolf started building custom, laddered portfolios of high-quality, tax-exempt municipal bonds that could be tailored geographically to suit clients’ desires to invest in their own communities.
In May 2010, BSW launched the R3 Bond Strategy (the R3 stands for “rethink responsible returns”). The firm says it is the nation’s first municipal impact bond portfolio. Thirty-three percent of the portfolio is invested in green initiatives; 66% is invested in community and economic development projects. The fund initially raised $21 million and has since grown to $60 million. It appeared two months ago on Schwab’s Managed Account Platform, where independent advisors can access it for a management fee of 65 basis points.
BSW’s municipal bond impact strategy has been a hit with younger clients who’d rather invest in green buildings and mass transit than correctional facilities and roads that contribute to urban sprawl, according to Wolf.