Newday Funds is targeting millennials with a new mobile app featuring socially responsible portfolios designed to allow younger investors to align their values with their investing needs.
The company’s seven separately managed accounts have beaten the S&P 500 for the 6 months ended January 4, the company said, adding that the environmental, social and governance (ESG) accounts also offer a bespoke technology platform for investment advisors to brand and use to attract Gen X and millennial investors.
“We’re basically institutional investment managers who have developed a vertically integrated technology platform that allows us to deliver proprietary ESG portfolios that invest in and control the future,” said Newday CEO Douglas Heskey, a former CEO of Nollenberger Capital.
“We started Newday in an effort to reallocate capital flows to good companies," he said. "We believe sustainable companies not only deliver positive financial performance in the long term, but drive change in the way other companies adopt responsible environmental, social and governance practices and policies.”
Studies have shown that ESG companies are associated with higher profitability, lower risk and outperformance over the medium to long term. A Morningstar study found that socially responsible equity funds on average generated annual returns of 11.19 percent versus 10.55 percent returns by other funds over a five-year period ended August 2016.
“That gap has gotten even wider over the last couple of years,” Heske said. “It’s what’s driving asset allocation. Today one in four [funds] worldwide is devoted to some kind of ESG investing—about $30 trillion.”
But why target millennials when older investors have far more money to invest? The writing’s on the wall, Heskey said. Newday wants to capture the demand for the 75 million U.S.-based millennials who are set to inherit $60 trillion of wealth by 2040 and who want digital, affordable, transparent, sustainable and socially responsible investment solutions, he said.
“By 2020, the millennial generation alone will represent one of every three adults and nearly one half of the entire U.S. workforce,” Heske said. “Some $7 trillion will be held by millennials in just over the next five years.
To attract younger investors, Newday has no minimum investment amount and college students can invest for free.
The firm searches a universe of thousands of companies that broadly meet environment, social and governance standards to create their seven proprietary strategies: animal welfare, gender equality, clean water, climate action, ocean health, global impact equities and fossil-free global impact equities.