Every year on “Giving Tuesday,” the global day of giving following some of America’s annual two largest shopping days (Black Friday and Cyber Monday), I donate to a research hospital that is working on treatments for a rare form of cancer that my mom was diagnosed with in 2013. While she’s lucky they caught her cancer early, most are not, and making a small annual donation towards a cure feels like the least I can do to make an impact.

Now imagine if my financial advisor knew about my annual donations to the research hospital and recommended strategies to align my portfolio with my desire to support oncological research and bio-technology innovations. There are a few ways in which my advisor could recommend aligning my investment portfolio to these interests.

Align, Integrate, or Target: Personalizing Your Portfolio

My advisor could suggest screening out companies or even entire industries with business activities that are considered harmful to human health: things like tobacco, alcohol, sugar, or fast food. This would be a great strategy for a client who wants to avoid investing their portfolio in things their doctor might tell them to stay away from.

In addition to applying these screens, my advisor could recommend an ETF that tracks biotech and pharmaceutical indices, intentionally giving my portfolio exposure to companies working on solutions and cures to diseases around the world.

What if my advisor went a step further? They could recommend a strategy that is designed to capture opportunities in the biotech industry, focusing on companies that are expanding medical access to untapped and underdeveloped markets and measuring the outcomes of that work.

Some investment strategies focused on opportunities in health might also consider avoiding exposure to pharmaceutical companies that have produced harmful drugs, like opioids. Even if a company has great financial returns today, the fund may avoid investing in it to avoid any future volatility. Should the company continue to produce drugs that cause significant harm to people, it could lead to lengthy legal or public relations crises and settlements that affect the value of the company.

Not only would my portfolio be aligned with something I care deeply about, but by investing in ways that intentionally seek unique opportunities related to my personal interests, while avoiding specific risk factors in the investment process, the long-term growth and value of my portfolio might ultimately be better than it would by simply investing in a strategy that would broadly expose my portfolio to the industry.

The point that’s often missed about sustainable investing in the public markets is that it is just another approach to personalizing a client’s portfolio. Sustainable investing is an opportunity to connect with your clients in a meaningful way and identify the things that matter most to them. If your client cares about the food they put into their body, the type of development that occurs in their neighborhood, or even where they donate their philanthropic dollars, why wouldn’t they also care about what their investment portfolio is allocated to?

To learn more about supporting your clients with sustainable investing solutions, reach out to our team at sustainable@envestnet.com or visit envestnet.com/sustainable/.

The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this brochure is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. All investments carry a certain risk, and there is no assurance that an investment will provide positive performance over any period of time. An investor may experience loss of principal. The asset classes and/or investment strategies described may not be suitable for all investors and investors should consult with an investment advisor to determine the appropriate investment strategy. Investment decisions should always be made based on the investor’s specific financial needs and objectives, goals, time horizon and risk tolerance. Past performance is not indicative of future results. This material is not meant as a recommendation or endorsement of any specific security or strategy. Information has been obtained from sources believed to be reliable, however, Envestnet | PMC cannot guarantee the accuracy of the information provided. The information, analysis and opinions expressed herein reflect our judgment as of the date of writing and are subject to change at any time without notice. An individual’s situation may vary; therefore, the information provided above should be relied upon only when coordinated with individual professional advice. Reliance upon any information is at the individual’s sole discretion. Diversification does not guarantee profit or protect against loss in declining markets.

ESG and impact focused strategies are identified with the support of third-party research. Certain asset classes may not have an ESG or impact focused strategy that goes through our ESG due diligence standards. In this case, the portfolios will generally utilize alternative strategies that have been vetted by the PMC Research Team. Funds that incorporate ESG characteristics into the investment process may limit their exposure to certain types of investments. As a result, an investment in an ESG focused fund may be less diversified relative to funds with similar strategies that do not have an ESG focus.

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