Shaulablog

I have an SRI fund manager that I really love, and nearly a decade of experience with them and good performance. I spoke recently to a consultant about them and he was having trouble getting excited. He admitted there was nothing he would really ding them for but that they didn’t float to the top of his column. As I later pondered his general concerns with a friend she came up with the phrase “repeatable process”. That really sounded like a good capture of his concerns for me, and a logical thing he might be looking for. Certainly as an investor looking at companies I want to see repeatable process – in a startup there needs to be at least a few, because growing a company is all about designing and re-designing repeatable processes.

In selecting a fund manager it makes sense to do the same thing – look for repeatable process, but I found myself thinking that SRI shops that’s probably less likely. Sustainable and Responsible Investing (following the lead of Calvert following the lead of Good Funds in renaming Socially Responsible Investing) is about investing in companies and transactions that bring people back into processes. It makes sense to me that the investment funds and managers themselves would be the same way. I could make an argument that it brings more risk into the equation, but I will instead argue that it brings more thinking into the equation as well.

I use an investment advisor and one of their roles is to check up regularly on investment funds and follow up on personnel changes at fund management companies to respond if that change seems likely to impact future performance. It seems to me the advisor layer is perfect for mitigating any additional risk brought on by my funds using people instead of processes, allowing me (and the companies those managers analyze) to benefit from their creative and engaged thinking.

Standard investment advisor practice seems to instead be to focus on repeatable process – creating an unnecessary barrier to understanding, respecting and fully utilizing the value of SRI funds. Perhaps it minimizes the advisors workload but it reduces their value as well.