Targeting More Sustainable Returns
This article is part of ourRising Star Portfolio series.
The conventional "wisdom" that socially responsible investing is a money-losing strategy isn't actually wise at all. Here's more proof shining forth from the SRI universe.
Trillium Asset Management, an investment advisory firm specializing in the environmental, social, and governance -- or ESG -- philosophy, recently released victorious three-year returns for its Sustainable Opportunities portfolio. The portfolio has achieved an average annual return of 2.8%, double the returns of the S&P Composite 1500 benchmark.
Trillium has bested the benchmark by targeting companies with stellar sustainability profiles, revolutionizing areas like energy efficiency, clean energy, sustainable farming, and preventive medicine.
A look at some companies
In particular, Trillium's Sustainable Opportunities portfolio and my Rising Star portfolio apparently have at least one common component other than a general SRI philosophy and an emphasis on companies that do good in the world. We've both honed in on Whole Foods Market (NAS: WFM) , a truly revolutionary company that emphasizes good, sustainable business even in the tough, highly competitive grocery retail realm.
Zipcar (NAS: ZIP) has been on my own watchlist for a while, but IPO euphoria has initially caused me to steer clear from parking money in the stock just yet. Trillium's inclusion of Green Mountain Coffee Roasters (NAS: GMCR) in its portfolio doesn't surprise me, given Green Mountain's touting of its socially responsible values. But I don't believe its growth is sustainable, and smart folks who dig deep into corporate accounting are pretty bearish on Green Mountain, too.
Overall, Trillium's market-beating portfolio reveals compelling stock ideas for future research. Itron (NAS: ITRI) makes smart meters for water, electric, and gas utilities, while Waters Corp. (NYS: WAT) seeks sustainable innovations in health care, environmental management, food safety, and water quality. Ecolab (NYS: ECL) also has a water-quality angle, providing water filters as well as pest-control services and cleaning products.
Obviously, socially responsible investing can be very profitable, and the investment method's future looks brighter than ever given the building sustainability megatrend. These days, there's no shortage of stock ideas for the growing numbers of us who are interested in positive portfolios, either. So far, the method that I've used in compiling my Rising Star portfolio has felt like a rewarding way to invest on many levels, and clearly, others are having similar experiences.
- Add Whole Foods Market to My Watchlist.
- Add Zipcar to My Watchlist.
- Add Waters to My Watchlist.
- Add Itron to My Watchlist.
- Add Green Mountain Coffee Roasters to My Watchlist.
- Add Ecolab to My Watchlist.
At the time this article was published Alyce Lomax owns shares of Whole Foods Market in her personal portfolio. The Motley Fool owns shares of Zipcar and Whole Foods. Motley Fool newsletter services have recommended buying shares of Zipcar, Whole Foods, and Green Mountain Coffee Roasters, as well as creating a lurking gator position in Green Mountain Coffee Roasters. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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