The Intelligent Investor Newsletter – August 22, 2016


A bi-weekly publication from Consultiva Internacional, Inc. (Registered Investment Adviser)

Darren Walker, CEO of the Ford Foundation recently spoke about the challenges to impact investing at the 2016 Mission Investors Exchange conference. As summarized in an Institutional Investor article, Walker criticized the Foundation’s own investment policy, which seeks to maximize returns to provide grants and program related investments under the IRS mandated pay-out for private foundations. As many investors and advisors signatories to the United Nations Principles for Responsible Investments know, endowments should be considering the impact that their dollars have upon the world in which they invest. Walker and others are pushing to get Foundation investment offices to inject values into their investment approach. As signatories to the UN PRI we educate our clients on this topic also.

Impact investing means bringing into focus social, environmental and governance (ESG) aspects to investing, in addition to economic returns. It has become popular among investors who understand that capital markets can be used to tackle societal issues, but Walker was quick to acknowledge that many still are reluctant to take impact more seriously because they consider it as “oppositional to core investing”. At Consultiva we have also witnessed discussions where responsible investing has been branded as unsound, and that it means sacrificing returns. Industry leaders however, are proving otherwise. The MSCI USA ESG index is a good example; it’s a capitalization weighted index that provides exposure to companies with high ESG performance. It consists of large and mid-capitalization companies in the US market, and as seen in Graph I below, performs at par with the non-ESG index. In practicality, this means that a mutual fund following the index would probably perform as well as a fund mimicking the MSCI non-ESG index.

Impact investing vehicles are found across all asset classes, including alternative investments. There are private equity and venture capital funds that can provide impact in the shape of business development and job creation. In Puerto Rico, we will see an investment opportunity like this take off very soon and it will be presented during community reinvestment week the second week of October. We trust our Island can also benefit from the impact of well-placed private capital investments.

by Myrna Rivera, CIMA®
Founder & Chief Executive Officer

Graph 1
Graph 1





Consultiva is a Registered Investment Adviser. The registration with the Securities and Exchange Commission does not imply a certain level of skill or training. Consultiva has compiled the information for this report from sources Consultiva believes to be reliable. Sources include: investment manager(s); mutual fund(s); exchange traded fund(s); third party data vendors and other outside sources. Consultiva assumes no responsibility for the accuracy, reliability, completeness or timeliness of the information provided, or methodologies employed, by any information providers external to Consultiva. Conclusions reflect the judgement of Consultiva Investment Strategy Committee at this time and is subject to change without prior notice. There also can be no guarantee that using this information will lead to any particular result. Past performance results are not necessarily indicative of future performance. Diversification does not guarantee a profit or protection against loss. This document is for informational purposes only and is not intended to be an offer, solicitation, recommendation with respect to the purchase or sale of any financial investment/ security or a recommendation of the services supplied by any money management organization neither an investment advice or legal opinion. Investment advice can be provided only after the delivery of Consultiva’s Brochure and Brochure Supplement (ADV Part 2A and 2B) once a properly executed investment advisory agreement has been entered into by a client and Consultiva. This is not a solicitation to become a client of Consultiva. There are risks involved with investing including the possible loss of principal. All investments are subject to risk. Investors should make investment decisions based on their specific investment objectives, risk tolerance and financial circumstances. Global and international investments may carry additional risks that are generally not associated with U.S. investments, such as currency fluctuations, political instability, economic conditions and varying accounting standards. Annual, cumulative, and annualized total returns are calculated assuming reinvestment of dividends and income plus capital appreciation.